Retail investors, HNIs pile on Ujjivan Small Finance Bank\'s oversubscribed IPO
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The initial public offering (IPO) of Ujjivan Small Finance Bank Ltd, a unit of lender Ujjivan Financial Services Ltd, continued to see strong investor demand on the second day of its offering on Tuesday, with majority of the bids flowing in from retail investors.

The offering of 123.95 million shares, excluding the anchor allotment portion, received bids for about 600 million shares at the end of day two, stock-exchange data showed. The book was subscribed about 4.9 times.

The quota reserved for retail investors, whose bid application cannot exceed Rs 2 lakh per individual investor, was subscribed nearly 24 times.

The portion set aside for non-institutional investors was covered 2.5 times while the shares reserved for institutional investors was subscribed 85% or 0.85 times.

The IPO, which will close on Wednesday, was fully covered at the end of first day on Monday.

Ujjivan SFB is seeking Rs 6,394.42 crore ($895.6 million) in valuation from the IPO, which would result in roughly 11.73% stake dilution.

The Rs 750 crore offering is entirely a fresh sale of shares. At the upper end of the Rs 35-37 price band, the company will issue a total of 202.7 million shares. This includes the anchor investors' portion.

A day prior to the IPO, the lender raised Rs 303.75 crore ($42.31 million) from anchor investors including Singapore sovereign wealth fund GIC Pte. Ltd and homegrown private equity firm CX Partners.

Ujjivan SFB will use the net proceeds from the issue to augment its Tier-I capital for future requirements to grow its operations and comply with regulatory norms for enhanced capital base as may be prescribed in the future.

Ujjivan SFB had filed a draft proposal for the IPO on 16 August. It received SEBI approval on 16 October.

Ujjivan SFB will join listed peers such as PE-backed AU Small Finance Bank Ltd, Equitas Holdings as well as its parent Ujjivan Financial on stock exchanges.

Chennai-based Equitas listed its shares in April 2016, followed closely by Ujjivan Financial.

Bengaluru-based Ujjivan Financial launched small finance banking operations in February 2017 after transferring the business to Ujjivan SFB, a new entity. The group had received in-principle approval from the Reserve Bank of India in October 2015 to establish a small finance bank.

Kotak Mahindra Capital Co, IIFL Securities and JM Financial are arrangers and managers to the share sale.

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