Ujjivan Small Finance Bank Ltd, a unit of non-bank lender Ujjivan Financial Services Ltd, has filed a draft prospectus with the Securities and Exchange Board of India (SEBI) to float an initial public offering.
The entire IPO is a fresh sale of shares, worth Rs 1,200 crore. This includes a pre-IPO placement round worth Rs 300 crore, the company said in its draft proposal.
The bank may dilute a stake of about 15% and get a valuation of Rs 8,000 crore, a person in the know told VCCircle.
A successful IPO and listing will see Ujjivan SFB join listed peers such as PE-backed AU Small Finance Bank Ltd as well as its parent Ujjivan Financial.
SKS Microfinance, which was renamed to Bharat Financial Inclusion and being acquired by private lender IndusInd Bank, was the first micro-lender to list on the bourses in 2010.
Chennai-based Equitas, which currently has a market value of Rs 3,839.67 crore, listed its shares in April 2016 immediately followed by Ujjivan Financial Services.
Bengaluru-based Ujjivan Financial launched small finance banking operations in February 2017 after transferring its business to Ujjivan Small Finance Bank Ltd, a new entity. The group had received in-principle approval from the Reserve Bank of India (RBI) in October 2015 to establish an SFB.
Here’s a snapshot of the proposed IPO by Ujjivan SFB
The IPO is a complete fresh sale of shares worth Rs 1,200 crore that includes a pre-IPO placement round worth Rs 300 crore, the company stated in its draft proposal.
The bank may dilute about 15% stake and fetch a valuation of Rs 8,000 crore, one person in the know told VCCircle.
Use of proceeds
The company will use the net proceeds from the issue to augment its tier – 1 capital base for its future capital requirements such as organic growth and expansion besides complying with regulatory requirements for enhanced capital base, as may be prescribed in the future.
Kotak Mahindra Capital Co, IIFL Securities and JM Financial are arranging and managing the share sale.
Cyril Amarchand Mangaldas is the legal counsel representing the company in its IPO process.
L&L Partners (formerly Luthra & Luthra Law Offices) and Squire Patton Boggs Singapore LLP are Indian and international legal counsel representing the merchant bankers on the IPO.
In its near two-and-a-half year of operations, Ujjivan SFB claims to have the most diversified portfolio with operations spread across 24 states and union territories as on March 2019.
It had 4.72 million customers who operated through the bank’s 474 banking outlets and a network of 387 ATMs (including nine ACRs) as on June 2019. Of the total outlets, Ujjivan SFB operationalized 287 banking outlets in fiscal 2019.
Its offerings include giving loans to micro banking customers such as individual and groups, agriculture and allied activities, MSE, affordable housing, financial institutions group, personal loans, and vehicle loans.
It offers CASA (current account, savings account) banking services to customers besides a variety of deposit accounts. It is also engaged in distributing third-party insurance products.
Gross advances (including securitization/ IBPC) increased from Rs 6,383.97 crore as on March 2017 to Rs 11,782.93 crore as on June 2019.
Its deposits stood at Rs 7,956.76 crore at the end of June 2019 compared with Rs 206.40 crore.
Its gross non-performing assets (NPAs) were 0.84% of its total gross loan book.
The company reported net profit of Rs 94.48 crore for three months ending June 2019 on revenue (from operations) of Rs 605.37 crore during the quarter. In the corresponding period last fiscal year, the bank reported net profit of Rs 46.55 crore on revenue of Rs 406.32 crore.
For full year fiscal 2019, the microlender’s net profit was Rs 199.22 crore on revenue of Rs 1,831.61 crore. For fiscal year 2018, its net profit was Rs 6.8 crore on revenue of Rs 1,467.87 crore.