ESAF Small Finance Bank IPO - 7 Things to Know

ESAF Small Finance Bank Ltd had filed the DRHP for its proposed IPO back in July 2021 and had got SEBI approval in October 2021. However, ESAF SFB is yet to announce the dates of its proposed IPO and is waiting for the IPO momentum to pick up.

7 Important Things to Know About ESAF Small Finance Bank IPO

1) ESAF Small Finance Bank Ltd has filed for a Rs.997.78 crore IPO with SEBI which comprises of a fresh issue of Rs.800 crore and an offer for sale component of Rs.197.78 crore. The overall issue also includes a small portion set aside as part of the employee quota of the IPO.

2) ESAF Small Finance Bank was promoted by ESAF Financial Holdings and Kadambelili Paul Thomas. These two principal promoters of ESAF SFB collectively own up to 69.40% stake in the small finance bank. ESAF Small Finance Bank operates in the segments of micro loans, retail loans, MSME loans, corporate loans and agricultural loans.

3) ESAF Small Finance Bank Ltd will see the two promoters selling shares worth Rs.150 crore as part of the offer for sale. In addition, PNB MetLife will offload shares worth Rs.21.33 crore and Bajaj Allianz will sell shares worth Rs.17.46 crore. A small portion of shares will also be sold by PI Holdings and early investor John Chakola.

4) While there is no confirmation at this point of time, ESAF Small Finance Bank IPO will also look to raise Rs.300 crore by way of pre-IPO placement to select institutions and high net worth investors. If the pre-IPO placement is successful, the actual IPO size will be reduced proportionately by the company.

5) Like most financial institutions, ESAF Small Finance Bank will use the fresh proceeds of Rs.800 crore to boost its capital buffers. As a small finance bank, ESAF is required to allocate nearly 75% of its adjusted net credit to the priority sector. Hence, the bank needs high capital buffers since the risk in the segment is relatively high.

6) ESAF SFB is one of the leading small finance banks in India in terms of client base, yield on advances, AUM, net interest margins, loan portfolio, micro loan portfolio etc. Its peer group in the industry includes players like Suryoday SFB, Equitas SFB, Ujjivan SFB, Spandana Sphoorthy etc. 

7) As of the second quarter of FY21, ESAF Small Finance Bank had 550 branches and 421 customer service  centres, which are operated by business correspondents. The SFB serves around 46.8 lakh customers spread across India geographically.

The issue is being lead managed by Axis Capital, Edelweiss Financial, ICICI Securities and IIFL Securities, acting as the book running lead managers (BRLM) to the issue.

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