Kolkata-based Bandhan Bank is faced with a Catch-22 situation as it comes out with an initial public offer next week.
It may end up not complying with one of the two mandates of Reserve Bank of India: one, which mandates public listing within three years of starting operations and the other, which mandates reduction of promoter stake to 40%, again within three years of commencing operations.
One-year lock in
However, the Securities and Exchange Board of India (SEBI) mandates a one-year lock-in period for promoters after an IPO. So, promoters cannot sell shares within the first year of listing. There is a three layered structure for the entity — Bandhan Financial Services, which holds 100% stake in Bandhan Financial Holdings, the promoter of Bandhan Bank and holds 89% stake in the bank. Post IPO, promoters’ stake in Bandhan Bank will decline to 82%.
Bandhan Bank started operations in August 2015 so it would have to list on the exchanges by August this year. The lender is likely to approach the regulator for more time to bring down promoter stake to 40%.
“To bring down this large shareholding..., will take time,” said Sunil Samdani, CFO, Bandhan Bank. “If you see the real promoters as defined in the DRHP, they own only 40.7% in the ultimate holding company.” Bandhan has set a price band of ₹370-₹375 for the IPO opening on March 15. At the top end of the band, the lender could raise ₹4,400 crore.
Kotak Mahindra Capital Company Ltd., Axis Capital Ltd., Goldman Sachs (India) Securities Pvt. Ltd., JM Financial Institutional Securities and J.P. Morgan India Private Ltd. are the book-running lead managers to the issue.
Bandhan is the only micro finance institution to transform itself into a universal bank after receiving a banking licence.
