IIFL, Avendus funds lead Ujjivan Small Finance Bank\'s pre-IPO funding round
Photo Credit: VCCircle

Funds of IIFL and Avendus Capital, along with Akash Bhanshali of Enam, have led Ujjivan Small Finance Bank Ltd’s pre-IPO round worth Rs 250 crore ($35 million at current exchange rate).

Ujjivan SFB allotted nearly 71.43 million shares at Rs 35 apiece, parent Ujjivan Financial Services Ltd informed stock exchanges on Wednesday. The fundraising resulted in dilution of 4.75% stake and values the bank at Rs 5,290 crore ($736 million).

Ujjivan SFB had filed a draft proposal for an IPO in August with an objective to raise Rs 1,200 crore through an issue of shares, including a pre-IPO placement of Rs 300 crore.

IIFL’s funds bought a little more than half of the bank’s shares in the round, two people aware of the matter told VCCircle.

Akash Bhanshali, son of Enam’s late co-founder Manek Bhanshali and nephew of veteran dealmaker Vallabh Bhanshali, participated in the pre-IPO round, said one of the persons cited above.

Email queries to IIFL, Avendus and Akash Bhanshali’s office did not yield a response till the time of publishing the report.

Ujjivan SFB, which received a regulatory nod for its IPO on 16 October, is looking to float its offering in the next one month. The company aims to raise funds to boost its Tier-I capital for cash requirements such as those for organic growth and expansion, besides complying with regulatory norms demanding enhanced capital base.

Through the IPO, the bank may dilute a total stake of about 15% and get a valuation of Rs 8,000 crore, a person in the know had told VCCircle previously. Kotak Mahindra Capital Co., IIFL Securities and JM Financial will manage the share sale.

A successful IPO and listing will see Ujjivan SFB join listed peers such as PE-backed AU Small Finance Bank Ltd.

SKS Microfinance, which was renamed as Bharat Financial Inclusion Ltd and acquired by private-sector lender IndusInd Bank, was the first microlender to list on exchanges in 2010.

Chennai-based Equitas, the holding firm of a microlending SFB that has a market value of Rs 3,839.67 crore, listed its shares in April 2016. Bengaluru-headquartered Ujjivan Financial launched SFB operations in February 2017.

In its nearly two-and-a-half years of operations, Ujjivan SFB claims to have the most diversified portfolio with operations across 24 states and Union Territories as on 31 March 2019.

It had 4.72 million customers, 474 banking outlets and a network of 387 ATMs as at the end of June 2019. Of the total outlets, it operationalised 287 banking outlets in 2018-19.

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