ESAF Small Finance Bank IPO to open on November 3, plans to raise Rs 463 crore

ESAF Small Finance Bank IPO to open on November 3

The ESAF Small Finance Bank IPO will be launched for subscription on November 3, with a target to raise Rs 463 crore. This would be the third public issue during the coming week, after Cello World and Mamaearth parent Honasa Consumer.

The anchor book will be opened for a day on November 2, while the public issue will be closing on November 7. The price band for the issue will be announced soon.

The offer consists of a fresh issuance of shares worth Rs 390.7 crore by the company, and an offer-for-sale (OFS) of Rs 72.3 crore shares by three shareholders.

Promoter ESAF Financial Holdings will be selling Rs 49.26 crore worth of shares via OFS, while PNB MetLife India Insurance Company and Bajaj Allianz Life Insurance Company will offload Rs 23.04 crore worth of stocks in the OFS.

Further, the Kerala-based small finance bank has reserved equity shares worth up to Rs 12.5 crore for its employees.

Also read: Cello World raises Rs 567 crore from anchor investors ahead of IPO

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

The bank had received approval from the market regulator Sebi on October 17, to go ahead with IPO plans.

Financial Performance

While its operations are spread out across India, the business is concentrated in South India, particularly in Kerala and Tamil Nadu. It has a network of 700 banking outlets, 767 customer service centres, 22 business correspondents, 2,116 banking agents, 525 business facilitators and 559 ATMs spread across 21 states and two union territories.

The small finance bank has reported healthy financial performance in the past years and the first quarter of current financial year, with improving asset quality performance.

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Net profit for the year ended March FY23 grew by 452.4 percent to Rs 302.3 crore compared to the previous year. 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% to Rs 14,690.6 crore compared to the previous year.

In the quarter ended June FY24, net profit jumped 22.6 percent to Rs 130 crore and net interest income increased by 30.5 percnet to Rs 585.5 crore compared to corresponding period last fiscal, while provision coverage ratio improved to 74.35 percent from 62 percent during the same period.

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 June FY24 quarter.

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Listing Date

ESAF Smalll Finance Bank will finalise the basis of allotment of IPO shares by November 10 and the equity shares will be credited to the demat accounts of eligible investors by November 15.

The trading in its equity shares on the bourses will commence with effect from November 16, as per IPO schedule.

Post listing, ESAF would be the sixth small finance bank trading on the bourses after AU Small Finance Bank, Ujjivan Small Finance Bank, Equitas Small Finance Bank, Suryoday Small Finance Bank, and Utkarsh Small Finance Bank.

ICICI Securities, DAM Capital Advisors, and Nuvama Wealth Management are the merchant bankers to the offer, while Link Intime India is the registrar to the offer.