PE-backed AU Small Finance Bank jumps 51% on trading debut
Photo Credit: Reuters

Private equity-backed AU Small Finance Bank Ltd made a strong debut on the stock markets on Monday with its shares listing 47% above the initial offering price and then moving higher.

Shares of the lender started trading on the BSE at Rs 525 apiece compared with the issue price of Rs 358. The shares traded between Rs 545 and Rs 506.80 before closing at Rs 541.20, up 51% from the IPO price, BSE data showed.

The 30-stock benchmark BSE Sensex was quoting 0.6% higher in morning trade.

AU’s market capitalisation at the closing share price is about Rs 15,384 crore ($2.38 billion). The Jaipur-based lender, formerly known as Au Financiers (India) Ltd, had sought a valuation of Rs 10,175 crore through the IPO that closed on 30 June and was subscribed more than 50 times.

AU is the third micro-lender to list on the bourses and the 13th company to go for an IPO this calendar year.

Peers Equitas Holdings Ltd and Ujjivan Financial Services Ltd made strong debuts on the stock market last year.

Chennai-based Equitas, which was the first small bank to go for an IPO, saw shares list at a 31% premium, while Bengaluru-based Ujjivan rose roughly 10% on listing.

Seven out of the previous 12 companies that went for an IPO in 2017 have gained on their debut. Avenue Supermarts Ltd, which operates hypermarket chain D-Mart, made the best debut with its shares listing at twice the issue price.

Central Depository Services Ltd listed at a premium of nearly 80% nearly two weeks ago while its part-owner and stock-exchange operator BSE Ltd had gained 33% on listing earlier this year.

AU’s IPO comprised a complete offer-for-sale by private equity firms Warburg Pincus, Kedaara Capital, MYS Holdings Pvt. Ltd, ChyrsCapital Investment Advisors India and International Finance Corporation, apart from its promoters.

These shareholders raised Rs 1,912.51 crore by selling an 18.79% stake on a post-issue basis. Warburg sold roughly 5.21% while IFC parted with a 2.66% stake. ChrysCap offloaded 3.96% while Kedaara Capital sold 3.64%.

Promoters Sanjay Agarwal and members of the Agarwal family divested a 2.97% stake through the IPO.

AU had filed its draft red herring prospectus for the IPO on 2 February. It received regulatory approval on 22 March.

ICICI Securities Ltd, HDFC Bank Ltd, Motilal Oswal Investment Advisors Pvt. Ltd and Citigroup Global Markets India Pvt. Ltd managed the IPO. The lender had hired AZB & Partners as its legal counsel, whereas the bankers had appointed Shardul Amarchand Mangaldas & Co as their Indian legal counsel and Sidley Austin LLP as their international counsel. The selling shareholders together had appointed law firm Cyril Amarchand Mangaldas as their counsel.

The financial services firm had started operations in 1996 in Jaipur, and got registered as a non-banking financialcompany in 2000. It was among the 10 firms to receive the RBI’s in-principle approval in 2015 to start a small finance bank.

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