ESAF Small Finance Bank gets SEBI nod to float IPO
Photo Credit: Reuters

ESAF Small Finance Bank Ltd has received regulatory nod to float an initial public offering (IPO).

The Securities and Exchange Board of India (SEBI) issued final observations to the lender’s proposal on March 20, according to information published on the capital markets regulator’s website.

This takes the number of companies to have received regulatory clearances so far this year to 14. SEBI had cleared 28 IPO proposals last year, 72 in 2018 and 46 in 2017.

The approval comes at an ominous time. Stock markets have plunged 30-40% over the past few weeks as the coronavirus pandemic spread worldwide, infecting more than 360,000 people and killing over 16,000. This has disrupted businesses and dealmaking, and prompted several companies in India to defer their IPOs.

ESAF SFB had filed its draft proposal with SEBI in January for Rs 976-crore IPO. The Kerala-based lender plans to raise Rs 800 crore by selling fresh shares while existing shareholders plan to sell shares worth Rs 176.2 crore, according to its draft prospectus.

The lender may consider a pre-IPO placement of shares to raise up to Rs 300 crore as part of its fresh capital raising.

The proceeds will be used to augment its Tier-I capital to meet future capital requirements.

Axis Capital, Edelweiss Financial Services, ICICI Securities and IIFL Securities are the merchant bankers managing the IPO. VCCircle had first reported in August last year that ESAF had shortlisted these four bankers for the IPO.

ESAF Small Finance Bank operates in 16 states and one union territory through 403 branches and 38 ultra-small branches, serving about 3.73 million customers. It first started as a non-government organisation in 1992 and became a microfinance institution in 2008.

In 2015, it received an in-principle licence from the Reserve Bank of India to launch a small finance bank. ESAF Small Finance Bank was incorporated in May 2016. 

ESAF will join a number of its peers on the stock markets. AU Small Finance Bank floated its IPO in 2017. Ujjivan Small Finance Bank listed its shares last month while Equitas Small Finance Bank filed its IPO prospectus in December.

Fincare Small Finance Bank said last year it was looking to go public by 2021 after raising fresh funding from existing investors including TA Associates, Leapfrog Investments and Tata Opportunities Fund.

In the broader financial services sector, True North-backed Home First Finance Company India Ltd filed its prospectus for a Rs 1,500-crore IPO in November last year. The lender received regulatory nod for its IPO plan last month.

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