ESAF Small Finance Bank IPO: 10 things to know before subscribing to Rs 463 crore issue

ESAF Small Finance Bank IPO will open for subscription on November 3, 2023, and close on November 7, 2023

ESAF Small Finance Bank IPO is set to open for subscription on November 3. Through the public issue, the bank aims to raise Rs 463 crore. It is going to be the sixth lender in the small finance segment available for trading on the bourses after listing. Equitas Small Finance Bank, AU Small Finance Bank, Ujjivan Small Finance Bank, Suryoday Small Finance Bank, and Utkarsh Small Finance Bank are the currently listed entities on the stock exchanges.

Here are 10 key things to know before subscribing to the offer:

The IPO will open for subscription on November 3 and close on November 7.

The price band for the issue has been fixed at Rs 57-60 per share.

ESAF Small Finance Bank’s public offer comprises a fresh issue of 6.51 crore shares worth Rs 390.7 crore and an offer-for-sale of 1.2 crore shares worth Rs 72.3 crore. In the OFS, promoter ESAF Financial Holding will offload shares worth Rs 49.26 crore, while investors PNB Metlife India Insurance Company will sell Rs 12.67 crore worth of shares and Bajaj Allianz Life Insurance Company Rs 10.37 crore worth of shares. The issue includes a reservation of Rs 12.5 crore worth of shares for its employees, who will get those at a discount of Rs 5 per share to the final issue price.

The net fresh issue proceeds will be utilised for augmenting the bank's Tier–I capital base to meet future capital requirements and for increasing business, which is primarily onward lending.

Investors can bid for a minimum of 250 equity shares and multiples of 250 after that. Hence the minimum investment by retail investors would be Rs 14,250 (250 (Lot size) x 57 (lower price band)). At the upper end, the bidding amount will increase to Rs 15,000.

ESAF Small Finance Bank provide loans to rural and semi-urban customers. The bank's products consist of micro, retail, agricultural and MSME loans and loans to financial institutions. The bank has a network of 700 banking outlets (including 59 business correspondent-operated banking outlets), 767 customer service centres and 559 ATMs spread across 21 states and two union territories.

ESAF Small Finance Bank’s net profit jumped 452 percent to Rs 302.33 crore in the financial year ended March 2023 compared to Rs 54.73 crore in the year-ago period. Net interest income during the year increased by 60 percent on-year to Rs 1,836.3 crore, with deposits rising 14.4 percent to Rs 14,665.6 crore and disbursements increasing 23 percent to Rs 14,690.6 crore compared to the previous year. On the asset quality front, gross non-performing assets fell by 451 bps on-year to 1.65 percent and net NPA dropped 297 bps YoY to 0.81 percent at the end of the June FY24 quarter.

The book-running lead managers to the issue are ICICI Securities, Dam Capital Advisors and Nuvama Wealth Management while Link Intime India is the registrar.

The promoters of ESAF Small Finance Bank are Kadambelil Paul Thomas and ESAF Financial Holdings Private Limited.

The trading of ESAF Small Finance Bank’s equity shares on the bourses will commence with effect from November 16, as per the IPO schedule.