Fincare Small Finance Bank IPO - 7 Things to Know

Fincare Small Finance Bank Ltd which had filed the DRHP for its proposed IPO in the first half of 2021 had already secured SEBI approval in August 2021. However, as of February 2022, the company is yet to announce its IPO dates. Normally, the SEBI approval is valid for a period of 12 months from the date on which the SEBI observations are given by SEBI.

7 Things to Know About Fincare Small Finance Bank IPO
 

1) Fincare Small Finance Bank Ltd has filed and got SEBI approval for its Rs1,330 crore IPO which comprises of a fresh issue of Rs.330 crore and an offer for sale component by the promoters and early investors to the tune of Rs.1,000 crore. A small portion of the Fincare Small Finance Bank IPO is also reserved for the employees of the small finance ban.

2) The Rs.1,000 crore offer for sale will be used to list the bank and give exit to early shareholders and promoters of Fincare Small Finance Bank. The fresh issue of Rs.330 crore will be utilized to boost the Tier 1 capital of the bank. Small Finance banks are required to allocate 75% of their loan books to the priority sector and this automatically entails a higher degree of risk. Hence the business requires higher capital buffers.

3) Fincare Small Finance Bank Ltd was a microfinance institution before it converted into a small finance bank in the year 2017. Prior to that, the business of Fincare was split into Disha Microfin handling the Western India business and Future Financial Services handling the South India business. Once small finance banks achieve net worth of Rs.500 crore, the IPO has to be done within 3 years and that is also one trigger for this IPO.

4) Motilal Oswal Private Equity has invested Rs.185 crore to pick up in a stake in Fincare Small Finance Bank through a secondary acquisition. The stake was picked up by a fund that is advised by the Motilal Oswal PE. It represents a minority stake in Fincare Small Finance Bank.

5) Fincare Small Finance Bank offers a wide range of banking services to over 2.50 million investors across India. They have a wide range of offerings on the asset and liability side. Their offerings include fixed deposits, savings accounts, recurring deposits, gold loans, two wheeler loans, cash overdrafts and small ticket micro loans. 

6) Nearly 78.6% stake in Fincare Small Finance Bank is held by Future Financial Services and the company is looking to reduce its stake down to 40% over a period of 3-5 years. It will be participating in the OFS to reduce its stake. Other major investors include True North Fund, Wagner Fund and Omega and they would also look at partial exits.

7) The IPO of Fincare Small Finance Bank Ltd will be lead managed by ICICI Securities, Axis Capital, IIFL Securities, SBI Capital Markets and Ambit Private Limited. They will act as the book running lead managers or BRLMs to the issue.

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