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Ujjivan Small Finance Bank (SFB) has filed its draft red herring prospectus with SEBI for its proposed initial public offering of its equity shares. The Bengaluru-based SFB plans to raise INR1,200 crore (INR12 billion) through a fresh issue of equity shares. Ujjivan SFB IPO will be managed by Kotak Mahindra Capital Company, IIFL Securities and JM Financial.
Ujjivan SFB is a fully-owned subsidiary of microfinance lender Ujjivan Financial Services which is already listed on NSE and BSE. In the proposed Ujjivan SFB IPO, shares worth INR120 crore or 10% of the issue size will be reserved for eligible Ujjivan Financial shareholders.
It started operations in February 2017 and was recognized as a scheduled bank on 3 July 2017. As of 30 June 2019, the Ujjivan SFB operated 474 banking outlets that included 120 banking outlets in Unbanked Rural Centres (URCs). The bank is growing at a fast pace and operationalized 287 banking outlets in FY2019 alone.
In the year ended 31 March 2019, Ujjivan SFB posted a total income of INR2,037.6 crore and earned a profit of INR204.4 crore.
The draft prospectus mentions the company is also looking to raise as much as INR300 crore through a pre-IPO placement. The total stake dilution will be between 10% and 15%, taking the promoter shareholding down to about 85%. While the SFB is looking to list itself by November, it may delay the plans if the volatility in the secondary markets continues.
More SFB IPOs in the offing
SFBs are expected to increasingly tap the primary markets to meet the regulations laid out by the central bank. As per new Reserve Bank of India (RBI) norms, SFBs need to list themselves within three years of operations which means it has till January 2020 to meet the listing deadline. Within five years of commencing operations, SFBs are required to bring down promoter shareholding to 40%.