Equitas SFB prunes IPO size by half to Rs 518 cr, issue opens Oct 20

Price band fixed at Rs 32-33 a share; promoter stake to drop to 82-83% from 95.49% currently

Equitas Small Finance Bank (ESFB), a subsidiary of Chennai-based Equitas Holdings, has fixed the price band for its upcoming initial public offering (IPO) at Rs 32-33 per share. The IPO will open for subscription on October 20 and close on October 22. The issue for anchor investors will open on October 19.

Speaking to reporters today, P N Vasudevan, CEO, Equitas SFB, said that the promoter stake in SFB will drop to 82-83 per cent from the current 95.49 per cent post the IPO.

The public issue consists a fresh issue of Rs 280 crore, and an offer for sale of 72 million equity shares by Equitas Holdings, valued at Rs 237.6 crore at upper price band, taking the total issue size to Rs 517.6 crore. Originally, the Bank had planned a Rs 1,000 crore issue, which has now come down by half.

"We are reasonably comfortable on our capital adequacy ratio, so didn't need to raise as much capital. I believe we have adequate growth capital for the short term. Given the current macro environment, we thought it would be prudent to reduce the issue size," said Vasudevan.

The offer includes a reservation of Rs 51crore worth of shares for eligible shareholders of Equitas Holdings and Rs one crore shares for eligible employees of Equitas Small Finance Bank.

"Our deadline to go public was September 2019 as per RBI rules, which we missed, because we were trying to get regulatory nod for a scheme of arrangement which Sebi rejected. Listing was further delayed due to the pandemic," said Vasudevan.

"RBI rules say SFBs cannot automatically convert to universal banks. We can apply for a licence only after completing 5 years for RBIs examination. We will complete five years of operations in September 2021. We will approach RBI for a universal bank licence after we complete five years and see what their response is," said Vasudevan.