PE-backed Suryoday Small Finance Bank to raise Rs 2.5 bn ahead of IPO

Bank is already in talks with investors, hopes to close funding in 1-2 quarters; will list before RBI deadline

Private equity-backed Suryoday Small Finance Bank Ltd, which completed one year of operations two months back, is planning to raise around Rs 2.5 billion in a pre-IPO round. The Bank has also said that it will list before Reserve Bank of India (RBI's) mandated deadline.

Speaking to Business Standard after launching its first 'Partnership led Outlet' in Chennai on Wednesday, R Baskar Babu, MD and CEO of Maharashtra-based Suryoday Small Finance Bank Ltd said the company has already started discussion with investors and in the next one or two quarters the fund raising process would be closed.

Babu said the Bank is well-capitalised now, and that the proposed fund raising would be towards risk management and safety capital and to support future growth. Its current capital adequacy is around 45 per cent.

"We are talking to existing and new set of investors," Babu said, while declining to name them. Around 29 per cent of the shareholding is with the promoters, while the balance is held by instutions such as HDFC, IDFC, TVS Capital, International Finance Corporation (IFC) and others.

The Bank has set a loan book target of around Rs 30 billion and Rs 24 billion of deposits by end of March 2019, as against a Rs 16-billion loan book and Rs 7 billion in deposits expected by the end of this fiscal.

To support this, the Bank is planning to expand its presence by opening new branches. At present it has 24 fully-operational branches and another 216 microfinance branches, which are doorstep service centres.

The Bank is planning to convert all 216 by March 2019 into banking outlets, apart from adding more branches. By end of fiscal 2019, it expects to have 450-500 banking outlets.

Suryoday Small Finance Bank claimed this is the first time a Bank is opening up an outlet along with a partner, instead of using the franchise route, as prevalent in other sectors.

Babu said the Bank has decided to rope in partners as part of its expansion plan. The partners would be ex-bankers, teachers and other retired people.

Suryoday, which expects to close the fiscal ending March 2018 with a profit after tax (PAT) of Rs 100 million, said that it will list the Bank before RBI's deadline of March 2020.