Arihant Capital IPO report on Equitas Small Finance Bank
In order to comply with RBI norm of listing, the bank within 3 years of commencement, Equitas Small Finance Bank (Equitas SFB) is coming with an IPO of Rs 518 cr, including fresh issue of Rs 280 cr and OFS of 7.2 cr shares by promoter (Equitas Holdings). Post this IPO, Promoters stake in the bank will fall to 82.1%, which will have to be prune down further to 40% by Sep’21. Management has indicated that they will seek permission to do Holdco merger with Bank after completion of 5 years or may look for other option like M&A/OFS to reduce promoter stake to 40% and below.
Valuation and Outlook
Thus, near term outlook of the bank will remain challenging primarily on asset quality front. Hence, we recommend investor to ‘Subscribe’ for this issue only from a longer term perspective.
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