ESAF Small Finance Bank is looking to bring big names on board before its IPO hits the markets in the first quarter of next financial year.
The Kerala-based bank had filed draft papers in January and plans to raise up to Rs 300 crore in a pre-IPO placement. It is yet to receive regulatory approval for the issue.
"We are discussing with some HNIs who are interested to invest with a long-term perspective. If some marquee names show interest, it will be a good sign for other set of investors in the IPO offer," said K Paul Thomas, MD & CEO, ESAF SFB, adding that the discussions are on a preliminary stage and nothing has been finalised as of now.
If the bank is successful in getting the pre-IPO funding, the amount will be deducted from the IPO size.
ESAF SFB said that the promoter stake is likely to come down by 15-20 percent post-IPO, based on current market trends. The micro-finance lender is also open to acquisition as one of the options in the process going ahead.
"We are exploring different options to bring down promoter stake, but nothing is concrete as of now. We also have to take care of some investors in the holding company who wish to exit. We have enough time to think about options and various opportunities are available," said Gireesh CP, chief financial officer, ESAF SFB.
While microfinance loans constitute over 96 percent of the bank's advances, it has also started diversifying into housing, auto and agriculture loans. The bank aims to scale up these verticals going ahead.
"If a good opportunity comes for inorganic growth at the dilution stage, we may look at it. We are open to evaluating all options," Thomas said.
Thomas and other promoters hold 78 percent stake in the bank currently. The bank has time till March 2022 to bring down promoter stake below 40 percent, as per Reserve Bank of India (RBI) norms.
Thomas said that the bank is expecting a good response from the markets, on the lines of fund raising by other SFBs like Ujjivan SFB and AU SFB.
"The SFB model has been accepted by the markets and regulator from perspective of financial inclusion as well as sustainable business," Thomas said. He added that the success of the model is reflected in the fact that the RBI recently initiated on-tap licensing for SFBs.