Ujjivan SFB's Rs 750-cr IPO priced at 3x its book value; issue opens Dec 2

The initial public offering (IPO) of Ujjivan Small Finance Bank (SFB) will open on December 2. The price band has been fixed at Rs 36-37 a share. The issue will close on December 4. Bids can be made for a minimum 400 equity shares and in multiples of 400 shares thereafter.

The proposed issue of Ujjivan SFB comprises fresh issue of equity shares aggregating up to Rs 750 crore and a reservation of equity shares aggregating up to around Rs 75 crore for subscription by eligible shareholders of Ujjivan Financial Services.

Samit Ghosh, founder, Ujjivan SFB, told reporters at the press conference: “After we do this IPO, the promoter-shareholding will be down from 100 per cent to 84-85 per cent. Over the next two years, we will have to reduce the shareholding to 40 per cent. This is something we want to take up with the Reserve Bank of India (RBI) after we have completed with this listing.  

Microfinance lender Ujjivan Financial Services is the holding company of Ujjivan SFB.

The shareholders of Ujjivan Financial Services will get shares at a discount of Rs 2 per share to the final issue price.  

The SFB reduced its issue size after fundraising in a pre-IPO placement of over 71.4 million shares totalling Rs 250 crore, at about Rs 35 per share.

The SFB had received approval for the public issue from the Securities and Exchange Board of India in October.

In its red herring prospectus, the SFB said proceeds of the fresh issue would be utilised towards augmenting its tier–1 capital base to meet future requirements, and issue expenses.

The book running lead managers to the issue are Kotak Mahindra Capital Company, IIFL Securities, and JM Financial. Karvy Fintech is the registrar to the issue.

While talking about the economic slowdown, Ghosh said, “There is no slowdown in the microfinance sector and, in fact, we have seen some growth opportunities in the housing sector because some players left, but yes, there is slowdown in the micro, small and medium enterprises sector.”  

Commenting on the reverse merger possibilities, Ghosh added, “We have been in discussion with the RBI about the reverse merger at the end of five years. The RBI has told us once you complete five years, you can come back to us. Based on their comfort level with us, they would consider it for a reverse merger.”