Ujjivan SFB to raise Rs 600 cr in equity; expects to report profits in Q4

Listed entities need to have 25 per cent public holding and fresh capital will help business, says top executive.

Ujjivan Small Finance Bank (SFB) will in three to six months raise up to Rs 600 crore in fresh equity capital from institutional investors for increasing public holding to 25 per cent and support business growth.

The board of directors has approved the issuance of equity shares up to Rs 600 crore—that includes premium through Qualified Institutional Placement subject to the approval of the shareholders, the company told the BSE.

Its Capital Adequacy Ratio stood at 19.1 per cent with Tier-1 capital at 17.7 per cent at end of December 2021.

Ittira Davis, managing director and chief executive officer of Ujjivan SFB, said there is a regulatory requirement for listed entities to have 25 per cent public holding. Ujjivan is now at around 18 per cent. So, the bank has to go for another seven per cent stake of the public in the bank. This will precede the reverse merger of the promoting entity with the bank.

SFB came out with a public offer and listed on exchanges in Q3Fy20 to meet Reserve Bank of India norm mandating all SFBs to be listed as standalone entities within three years of commencing business.

Besides meeting regulatory requirements, fresh capital will help to grow business for next year or so. In the last two years, there has been hardly any growth after Covid-19 pandemic hit economic activity, he said.

As for getting back into profits after timing losses in Q3Fy22, Davis said the way things are pointing (rise in lending) bank should be able to achieve that (report profits) in the fourth quarter. The loan book built in the third quarter will begin to provide yields (interest income) in the fourth quarter. The way January 2022 had shown good traction, if February and March go in that direction then turnaround would be achieved.

It reduced losses to Rs 33.83 crore in Q3Fy22 from Rs 278.33 crore in the quarter ended December 2020 (Q3Fy21) and Rs 273.39 crore in Q2Fy22.

Its gross advances at Rs 16,463 crore in December 2021 were up 21 per cent Year-on-Year (Y-o-Y) basis and 13 per cent Quarter-on-Quarter (Q-o-Q). The disbursements during the third quarter were Rs 4,809 crore, up 120 per cent Y-o-Y and 54 per cent Q-o-Q.

The net NPAs of the bank touched 1.67 per cent of the net advances at end of December 2021, up from 0.05 per cent a year ago, but down from 3.29 per cent by September 2021 quarter.