Utkarsh Small Finance Bank Ltd has received market regulator Securities and Exchange Board of India’s (SEBI) nod to raise Rs. 1350 crore through Initial Public Offering (IPO). The company filed DRHP with SEBI on 5 March 2019.
The IPO consists of fresh issue aggregating up to Rs 750 crore and an offer for sale of up to Rs600 crore by the selling shareholder Utkarsh Coreinvest Ltd. The public issue of shares, of face value Rs 10 each, will be listed on both the NSE (National Stock Exchange) and the BSE (Bombay Stock Exchange) .
As stated in the DRHP, the company intends to utilize the net proceeds from the fresh issue to augment its tier 1 capital base to meet future capital requirements arising out of growth in its assets, i.e Loans and Advances. The company may consider raise Rs. 250 Cr through a pre IPO placement which would be in consultation with the appointed lead managers to the issue. If the pre-IPO placement, of equity shares aggregating upto Rs 250 crore, is undertaken, the amount will be reduced from the fresh issue.
The fast growing Varanasi headquartered company, who’s SFB was incorporated in 2016 and commenced operations in 2017, is one of the most profitable small finance banks in the country as on FY 2020, according to the CRISIL report. As on September 30, 2020, the retail and technology focused, small finance bank across 528 banking outlets has served 2.74 million customers majorly located in rural and semi urban areas in the states of Uttar Pradesh, Bihar and Jharkhand that has a significant untapped market. Its deposits and disbursements have grown at a CAGR of 54.48% and 33.66% respectively, between FY 18-20 and as on March 31, 2020 had the lowest gross and net NPA ratios amongst its SFB peers. Between FY17-20 Small Finance banks have registered an AUM growth rate of 30% CAGR and the loan portfolio is expected to see a growth of 22% in the near term.
ICICI Securities Ltd., IIFL Securities Ltd. and Kotak Mahindra Capital Company Ltd. are the BRLMS to the Issue.