Equitas Small Finance Bank fixes IPO price band at Rs 32-33 an equity share

Equitas Small Finance Bank on Thursday fixed the price band for its over Rs 500 crore initial public offering (IPO) at Rs 32-Rs 33 per equity share.

The IPO consists of a fresh issue aggregating up to Rs 280 crore and an offer for sale of up to 7.2 crore equity shares by Equitas Holdings Limited, the holding company of the bank.

The offer opens on October 20 and closes on October 22.

Post this offer, Equitas Holdings share in the bank will come down to 82-83 per cent from 95.49 per cent.

The bank's Managing Director and CEO P N Vasudevan said, This is a capital we will be using as growth capital. We are adequately capitalised as of now and this adds to our capital ratio which supports our growth going forward."

At present, the bank's capital adequacy ratio is around 21 per cent level and post the issue it will improve to 22 per cent, he said.

The bank had earlier planned to raise Rs 1,000 crore through IPO but later reduced the size due to a comfortable capital adequacy ratio and also on account of the present market conditions, Vasudevan said.

In the original DRHP (Draft Red Herring Prospectus), we had filed for Rs 1,000 crore of (IPO) issue. Now it has been reduced by half to just over Rs 500 crore. We have adequate capital and have enough head space in tier-II (capital) to pursue growth into the short-term future without requiring additional capital. So this is one reason we reduced the issue size, Vasudevan said.

As per the RBI norms, the promoter of a small finance bank must reduce their shareholdings in the bank to 40 per cent from five years of operations.

Equitas SFB will complete its five years of operations in September 2021.

Vasudevan said the two routes which are under consideration for reduction of Equitas Holdings in the bank are merger and acquisition and block sale of shares by the holding company.

There are two routes that we are looking at- one is the possible potential merger and acquisition transaction done by the bank which will dilute the holding company's share in the bank. The second route is the block sale by the holding company of its shares in the bank, he said.

When asked about plans to convert into a universal bank, Vasudevan said once the bank completes five years of operations in September next year, it would approach the Reserve Bank of India for it.