Equitas Small Finance Bank, True North-backed Home First get SEBI nod for IPO

By Ankit Doshi

  • 02 Mar 2020
Equitas Small Finance Bank, True North-backed Home First get SEBI nod for IPO
Credit: Reuters

Equitas Small Finance Bank, True North-backed Home First Finance Company India Ltd (HFFC) and state-run Indian Railway Finance Corp (IRFC) and have received a green signal from the capital markets regulator to float their initial public offerings (IPOs).

The Securities and Exchange Board of India (SEBI) issued final observations on HFFC and IRFC’s IPO proposals on February 25, and on Equitas SFB’s proposal on February 28, according to information published on its website.

This takes the number of companies to have received regulatory clearances so far this year to 12. SEBI had cleared 28 IPO proposals last year, 72 in 2018 and 46 in 2017.



The company filed for IPO on November 29 last year. The public offering comprises a fresh sale of shares worth Rs 400 crore ($ 76 million then) and a secondary market sale of shares worth Rs 1,100 crore by True North, Bessemer India and individual shareholders.

The company is also considering a pre-IPO placement of up to Rs 160 crore. If the pre-IPO placement is undertaken, the amount will be reduced from the fresh issue.


US-based Bessemer Venture Partners became HFFC’s first institutional investor in 2010. Tata Capital Growth Fund came in as a PE investor three years later.

In 2017, Tata Capital secured an exit when True North bet Rs 652 crore ($100 million then) to buy a 71.5% stake in HFFC, valuing it at Rs 912 crore.

True North valued HFFC at over 100 times its net profit for 2016-17 and 36 times its net earnings for 2017-18. Overall, HFFC’s valuation increased by more than tenfold between 2010 and 2017.


Currently, True North owns about 76.6% of the company. Bessemer owns about 16.2% and the rest is owned by individual shareholders.

Axis Capital, Credit Suisse Securities (India), ICICI Securities and Kotak Mahindra Capital Company are arranging and managing HFFC’s share sale.

Equitas SFB


The company filed for an IPO last December with a plan to raise Rs 500 crore by selling fresh shares and a secondary market sale of 80 million shares by parent Equitas Holdings. The total IPO size is pegged at Rs 1,000-1,100 crore ($141-155 million at current exchange rates).

An IPO and stock-market listing is imperative to the bank’s operations. In September, the Reserve Bank of India had barred the bank from opening new branches for missing its listing deadline, a key licensing condition. The RBI had also frozen the salary of Equitas SFB managing director and CEO Vasudevan PN.

At that time, the central bank had warned the lender that it might impose more restrictions if it failed to make “satisfactory progress” towards listing its shares.


Equitas SFB is the largest small finance bank by banking outlets, and second-largest by assets and deposits.

Equitas SFB, formerly Equitas Finance Ltd, will join Ujjivan SFB and PE-backed AU Small Finance Bank Ltd in going public. Ujjivan SFB went public earlier this month with a strong investor turnout and bumper listing. AU Small Finance Bank floated its IPO in 2017.

JM Financial, Edelweiss Financial Services and IIFL Securities are the merchant bankers that are part of the syndicate arranging the share sale.


The company filed its draft prospectus on January 17. The IPO comprises a fresh issue of 938 million shares and a secondary market offering of 469 million shares by the government to dilute a 13.64% stake. The company is currently entirely owned by the government.

The exact size of the IPO is not clear, but the government is hoping to raise about Rs 800-1,000 crore from the stake dilution. This could well take the overall IPO size upwards of Rs 2,500 crore, VCCircle estimates show.

The government’s stake sale is part of the disinvestment programme where it intends to monetise assets and plug the fiscal deficit. For the current fiscal year, the government had set a record Rs 1.05 lakh crore target through disinvestment. It has managed to raise only a fifth of the target thus far.

The government has been looking to list some key railways and railways-linked firms. IRFC’s IPO plans follow the success of the public float of state-run Indian Railway Catering and Tourism Corp (IRCTC), which is the Indian Railways’ online ticketing service provider. IRCTC’s Rs 645-crore IPO was subscribed nearly 112 times last October.

IDFC Securities, HSBC Securities and Capital Markets (India), ICICI Securities and SBI Capital Markets are the merchant bankers managing IRFC’s IPO.

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