Utkarsh SFB cuts IPO size by 63%; files revised draft papers

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Utkarsh Small Finance Bank Ltd has filed a revised draft papers with Securities Exchange Board of India with cutting its issue size by 63% to raise Rs 500 crore via initial public offering (IPO).

The IPO consists of only fresh issue of shares. Earlier the lender had filed DRHP in Jul 2021 to raise Rs 1350 crore comprising a new issue worth Rs 750 crore and an OFS to the tune of Rs 600 crore by its promoter Utkarsh Coreinvest.

The lender did not mention reasons behind cutting the IPO size.

The proceeds from the issue will be used for augmentation of Tier-I capital base to meet its future capital requirements. As of 31 Mar 2022, it’s Tier-1 capital base stood at Rs 1420.76 crore which is equivalent to 18.08 percent of the risk weighted assets as against minimum requirement of 7.5 percent.

The lender, which came into the operation in 2010, is primarily focused on providing microfinance to unserved and underserved segments and in particular in the states of Uttar Pradesh and Bihar.

As of 31 Mar 2022, the lender had 686 Banking Outlets and 12,617 employees across 22 states and Union Territories. Currently 27.70 percent of its Banking Outlets are located in Unbanked Rural Centres (URCs) as against the regulatory requirement of 25%.

The lender had 3.14 million customers (both deposit and credit) majorly located in rural and semi-urban areas primarily in Bihar, Uttar Pradesh and Jharkhand.

For fiscal year 2022, its total deposits stood at Rs 100.75 billion as against Rs 75.08 billion a year ago. Gross loan portfolio increased to Rs 106.31 billion from Rs 84.16 billion year-on-year. Loan disbursement rose to Rs 90 billion from Rs 59 billion.

The lender's gross non-performing assets for the period increased 6.1% from 3.75% last year. Net NPA rose 2.31% versus 1.33%. It reported a 45% deadline in profit from a year ago to Rs 61.46 crore.

ICICI Securities, Kotak Mahindra Capital are the lead managers to the issue.