Fincare Small Finance Bank files DRHP with SEBI, plans to raise Rs 1,330 crore via IPO

The digital-first small finance bank is planning to mop up Rs 1,330 crore. (Representative image)

Fincare Small Finance Bank, the Bengaluru-based microfinance company, has filed draft red herring prospectus (DRHP) with the capital markets regulator Securities and Exchange Board of India (SEBI) to raise funds via initial public offering.

The digital-first small finance bank is planning to mop up Rs 1,330 crore through its public offer which comprises a fresh issue of Rs 330 crore by the bank, and an offer for sale of Rs 1,000 crore by promoter Fincare Business Services.

This offer includes a reservation for subscription by its employees.

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Earlier this month, Motilal Oswal Private Equity picked up a minority stake in Fincare Small Finance Bank through its India Business Excellence Fund III, for around Rs 185 crore ($25 million). This transaction provided a partial exit to True North Fund, one of the key investors.

The bank is backed by marquee investors, including True North Fund V LLP, Wagner, Tata Opportunities Fund, LeapFrog Investments, SIDBI, Kotak Mahindra Life Insurance and Edelweiss Tokio Life Insurance.

At the time of filing DRHP, Fincare Business Services held 78.57 percent stake in Fincare SFB, Amethyst Inclusion 3.92 percent, Wagner 2.48 percent, True North Fund V LLP 2.34 percent, Indium IV (Mauritius) Holdings 2.27 percent, and Omega TC Holdings 1.18 percent.

The Bengaluru-based MFI-turned small finance bank started operations in July 2017. Before converting into a small finance bank, Fincare operated as an NBFC-ND under the name Disha Microfin since 2010 and was registered as an NBFC-MFI in 2013. In 2016, upon receipt of the RBI approval, the bank acquired the micro-finance operations of FFSPL (which started microfinance operations in 2007) and later changed its name to Fincare Small Finance Bank.

According to CRISIL, among comparable small finance bank peers in India, the bank had the highest growth rate in advances over FY18 to FY20. Its gross loan portfolio (GLP) grew from Rs 2,154.37 crore to Rs 5,547.58 crore, registering a CAGR of 41.05 percent, from March 2018 to December 2020.

The GLP growth was driven primarily by growth in borrowers from 1.02 million as of March 2018 to 2.19 million as December 2020, a CAGR of 31.82 percent. The bank had a total of 2.7 million customers (comprising borrowers and depositors) as of December 2020.

As of December 2020, 92 percent of its customers were located in rural areas, and 40 percent were new to credit. We believe that our business model is profitable, sustainable and socially beneficial.

ICICI Securities, Axis Capital, IIFL Securities, and SBI Capital Markets have been appointed as global coordinators and book running lead managers to the issue, while Ambit is the book running lead managers to the offer.