Bengaluru-based Fincare Small Finance Bank is gearing up to launch its IPO by mid-2020 and has hired merchant bankers for the same. According to a report by The Economic Times, the company has roped in ICICI Securities, Nomura India, IIFL and Axis Bank for the share sale. Prospectus for Fincare IPO is likely to be filed in the next 3-4 months.
Like most market offerings, Fincare IPO would be a combination of sale by existing shareholders and fresh shares. The company plans to raise nearly INR1,200 crore (INR12 billion) through the IPO.
Fincare Small Finance Bank was incorporated in June 2017 following the conversion of Disha Microfin into a Small Finance Bank. Disha Microfin – a microfinance NBFC – got RBI consent to convert into a Small Finance Bank in 2015.
The bank currently has 570 branches in 12 states and one Union Territory and plans to open around 100 new branches in the current fiscal year and expand operations to five more states. The move is aimed at taking the CFB’s gross loan amount to INR5,000 crore and deposits to INR4,000 crore by March 2020.
Fincare SFB counts private equity investors TrueNorth, TA Associates, Tata Opportunities Fund and LeapFrog Investments among its major investors with combined shareholding of nearly 80%. In its latest funding round, the bank raised nearly INR95 crore last year from existing investors True North, TA Associates and Tata Opportunities Fund.
Fincare IPO to be followed with more SFB offers
According to new RBI guidelines, Small Finance Banks (SFBs) need to list themselves within three years of commencement of operations and have a holding company as a promoter. The central bank has ruled out other options including a reverse merger of banks and their holding companies.
This regulation will impact lenders such as Equitas and Ujjivan which have listed their holding companies. These players will now need to list their SFB subsidiaries by September 2019 and January 2020, respectively.
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The central bank had issued SFB licences to 10 entities in 2015 leading to Equitas, Ujjivan and AU Small Finance Bank bringing their IPOs. However, Jana Small Finance Bank (formerly Janalakshmi Financial Services), Utkarsh Small Finance Bank and Capital Small Finance Bank are yet to launch their IPOs.