ESAF Small Finance Bank is looking to refile documents for an initial public offering (IPO) in December, the Kerala-based lender’s managing director and chief executive officer Kadambelil Paul Thomas said on November 3.
“We could not complete (the IPO) in the earlier timeline. We got the approval last year but we could not complete (the IPO process),” Thomas told reporters on the sidelines of the annual banking conference organised jointly by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Indian Banks' Association (IBA) in Mumbai.
“We are in the process of refiling the draft prospectus. In a month’s time — in December — we will file it.”
ESAF Small Finance Bank had in October 2021 got the Securities and Exchange Board of India’s nod to go ahead with the IPO.
The Rs 997.78-crore IPO comprised a fresh issue of equity shares worth Rs 800 crore and an offer for sale of Rs 197.78 crore by existing shareholders, the draft red herring prospectus (DRHP) had said.
As per SEBI guidelines, the IPO or rights issue needs to open within a year of approval or issuance of observations by the capital market regulator.
Thomas said on November 3 that the bank would “mostly” be going for a reduced IPO size in the refiled DRHP. He did not elaborate on the revised issue size.
“The exact amount has not been decided, but the general view is that we will go for a smaller size,” he said. The IPO would be launched in FY24 after getting approval from SEBI, he added.
The proceeds would be used to strengthen the capital ratios of the bank, the CEO said.
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“Our current CRAR (Capital to Risk (Weighted) Assets Ratio) is 20 percent. We require capital,” he added.
The Reserve Bank of India allows small finance banks to raise Tier II capital to the extent of 100 percent of Tier I capital. However, the proportion of Tier II capital is significantly lower for the industry.
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The Tier I capital adequacy ratio (CAR) stood at 18.7 percent for the industry as on March 31, whereas Tier II CAR was at 1.9 percent, according to a report by CareEdge.
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