Equitas Small Finance Bank, the wholly-owned subsidiary of Equitas Holdings Limited, will open its initial public offering (IPO) on Tuesday and its issue will close on Thursday. The expected date of the listing has been fixed for November 2, 2020. Equitas Small Finance Bank has fixed the price band for its over ₹500 crore IPO at ₹32- ₹33 per equity share.
The Equitas Small Finance Bank IPO consists of a fresh issue aggregating up to ₹280 crore and an offer for sale of up to 7.2 crore equity shares by Equitas Holdings Limited (EHL).
Here is what you need to know about Equitas Small Finance Bank IPO:
1. After this offer, Equitas Holdings share in the bank will come down to 82-83% from 95.49 per cent. “This is a capital we will be using as growth capital. We are adequately capitalised as of now and this adds to our capital ratio which supports our growth going forward,” the bank’s managing director and CEO PN Vasudevan had said last week, according to PTI.
2. Vasudevan had said the bank’s capital adequacy ratio is around 21% level at present and post the issue it will improve to 22%. He added that the bank had earlier planned to raise ₹1,000 crore through IPO but later reduced the size due to a comfortable capital adequacy ratio and also on account of the present market conditions.
3. “In the original DRHP (Draft Red Herring Prospectus), we had filed for ₹1,000 crore of (IPO) issue. Now it has been reduced by half to just over ₹500 crore. We have adequate capital and have enough headspace in tier-II (capital) to pursue growth in the short-term future without requiring additional capital. So this is one reason we reduced the issue size,” Vasudevan said.
{{/usCountry}}3. “In the original DRHP (Draft Red Herring Prospectus), we had filed for ₹1,000 crore of (IPO) issue. Now it has been reduced by half to just over ₹500 crore. We have adequate capital and have enough headspace in tier-II (capital) to pursue growth in the short-term future without requiring additional capital. So this is one reason we reduced the issue size,” Vasudevan said.
{{/usCountry}}4. The promoter of a small finance bank must reduce their shareholdings in the bank to 40% from five years of operations, according to the norms of the Reserve Bank of India (RBI). Equitas SFB will complete its five years of operations in September 2021.
5. Vasudevan had said the two routes which are under consideration for reduction of Equitas Holdings in the bank are merger and acquisition and block sale of shares by the holding company. “There are two routes that we are looking at- one is the possible potential merger and acquisition transaction done by the bank which will dilute the holding company’s share in the bank. The second route is the block sale by the holding company of its shares in the bank,” he was quoted as saying by PTI.
6. When asked about plans to convert into a universal bank, Vasudevan said once the bank completes five years of operations in September next year, it would approach the Reserve Bank of India for it.
7. Equitas Holdings had said on October 14 that Equitas Small Finance Bank has filed red herring prospectus (RHP) with the Registrar of Companies for initial public offer to raise ₹280 crore.
8. ESFB had filed the RHP with the RoC Chennai on October 11 in connection with the proposed IPO of equity shares for ₹2,800 million, Equitas Holdings had said in a regulatory filing. The RHP has been taken on record by the RoC on October 13, 2020, it added.
9. Equitas Small Finance Bank will raise fresh capital up to ₹2,800 million, where the promoter EHL will sell up to 7,20,00,000 equity shares, as per the proposed offer. The offer period for anchor investor is one day prior to the bid opening date ie October 19, 2020.
10. Equity shares aggregating up to ₹51 crore will be available for allocation on a proportionate basis to eligible EHL shareholders, the company has said. The eligible shareholders mean those individuals and Hindu joint families (HUFs) who are the public equity shareholders of EHL, excluding such persons who are not eligible to invest in the offer under applicable laws or are otherwise unable to make any such investment, as on the date of the red herring prospectus i.e. October 11, 2020.