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Fairfax-controlled CSB Bank\'s IPO covered over four times on Day 2
Photo Credit: VCCircle

The initial public offering (IPO) of CSB Bank Ltd continued to see investor demand on the second day of its offering on Monday, with a large number of bids flowing in from retail investors.

The offering of 11.55 million shares, excluding the anchor allotment portion, received bids for about nearly 50.21 million shares at the end of the day two, stock-exchange data showed. The book was subscribed 4.34 times.

The quota reserved for retail investors was subscribed 21.52 times. The portion set aside for non-institutional investors was covered 1.06 times while the shares reserved for institutional investors was subscribed 0.25 times or 25%.

The IPO was fully subscribed at the end of the first day helped by demand from retail investors.

The IPO, which opened last Friday, closes on November 26. The bank has set a price band of Rs 193-195 for the share sale.

On Thursday, the bank raised Rs 184.36 crore ($25.7 million) from a bunch of anchor investors including a Canadian pension fund and Indian alternative investment funds.

CSB Bank, controlled by Indian-born Canadian billionaire Prem Watsa’s investment firm Fairfax Financial Holdings Ltd, is seeking a valuation of Rs 3,600 crore ($502 million) through the IPO.

The Rs 625 crore public offer comprises a fresh sale of shares worth Rs 240 crore and a secondary sale of a little more than 19.77 million shares by 26 shareholders worth up to Rs 385 crore.

Existing individual and institutional investors selling stake in the IPO include HDFC Life Insurance Co. Ltd, ICICI Prudential Life Insurance Co. Ltd, Federal Bank Ltd, Bridge India Fund, Satellite Multicomm Pvt. Ltd and ICICI Lombard General Insurance Co. Ltd.

Fairfax, which acquired a 51% stake in CSB last year, is not selling any shares in the IPO. Fairfax’s 40% stake out of its total holding will remain locked in for five years in line with regulatory requirements.

Venture capital investor Volrado Venture Partners Fund II, which acquired CSB Bank shares in May 2017, is exempt from the lock-in period but is not selling any shares.

CSB Bank was originally incorporated in November 1920 and is one of the oldest private-sector banks in India. It has a strong base in Kerala, Tamil Nadu, Karnataka and Maharashtra.

The bank will use net proceeds to augment its Tier-1 capital base for its future capital requirement, which it expects to arise from growth in assets, primarily lending operations.

The proceeds from the fresh sale of shares will also help the bank to ensure compliance with Basel-III norms and other regulatory guidelines.

Axis Bank and IIFL Holdings are merchant bankers managing the bank’s share sale.

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