Equitas Small Finance Bank will open its initial public offering (IPO) on October 20 (Tuesday). Equitas Small Finance Bank is the wholly-owned subsidiary of NBFC Equitas Holdings and its issue will close on October 22.
This would be the third small finance bank to come out with IPO after AU Small Finance Bank and Ujjivan Small Finance Bank. JM Financial, Edelweiss Financial Services and IIFL Securities are the book running lead managers to the issue.
The IPO is the first in October after September saw the launch of as many as 8 IPOs. Post the IPO, the stake of Equitas Holdings Limited will decline to about 82 per cent from 95.49 per cent earlier. The shares are expected to list on BSE and NSE on October 30. Originally, the company had planned a Rs 1,000 crore issue which has now been reduced to half.
Equitas Small Finance Bank has fixed the issue price in the price band of Rs 32-Rs 33 per share. The public issue consists a fresh issue of Rs 280 crore (8.5 crore shares) and an offer for sale of 7.2 crore equity shares by Equitas Holdings (valued at Rs 237.6 crore at the upper price band), taking the total issue size to Rs 517.6 crore.
"We are reasonably comfortable on our capital adequacy ratio, so didn't need to raise as much capital. I believe we have adequate growth capital for the short term. Given the current macro environment, we thought it would be prudent to reduce the issue size," PN Vasudevan, CEO, Equitas Small Finance Bank said as quoted by CNBCTV18.
The IPO is mainly to meet the RBI’s regulatory norms that require the banking subsidiary to be listed within three years of commencement of operations which was September 2019 and to reduce promoter stake to 40 per cent within five years, which will be by September 2021. As per the regulations, the promoter holdings have to be reduced to 30 per cent in 10 years (by September 2026) and to 26 per cent in 12 years — by September 2028.
"Our deadline to go public was September 2019 as per RBI rules, which we missed. We missed the September 19 deadline for listing because we were trying to get a regulatory nod for a scheme of arrangement which SEBI rejected. Listing was further delayed due to the pandemic," Vasudevan said.