ESAF Small Finance Bank gets Sebi's go-ahead for Rs 976 cr IPO

ESAF Small Finance Bank has received capital markets regulator Sebi's go-ahead to float a Rs 976-crore initial public offering.

The company had filed draft papers with Sebi in January and obtained its observations on March 20, as per the latest information available with the markets watchdog.

Sebi's observations are necessary for any company to launch public issues, including initial public offer (IPO), follow-on public offer (FPO) and rights issue.

The IPO ofESAF Small Finance Bank comprisesa fresh issue of shares worth Rs 800 crore and an offer-for-sale (OFS) aggregating up to Rs 176.2 crore, according to the draft prospectus filed with the Securities and Exchange Board of India (Sebi).

The bank, in consultation with its book running lead managers may consider a pre-IPO placement of up to Rs 300 crore. If it is undertaken, the amount raised will be reduced from the fresh issue, the draft papers noted.

The proceeds from the fresh issue will be used to augment the bank's tier-1 capital (primarily loans or advances and investment portfolio) to meet future capital requirements.

The public issue is being managed by Axis Capital, Edelweiss Financial Services, ICICI Securities and IIFL Securities.

The Kerala-based bank operates in 16 states and 1 union territory through its 403 branches and 38 ultra-small branches, serving over 3.73 million customers.

The bank's net profit increased from Rs 24.06 crore in September 2018 to Rs 92.44 crore in September 2019 and the interest earned increased from Rs 472.25 crore to Rs 660.68 crore in the same period.

The bank will continue to focus on its rural and semi urban franchisees and increase deposits across non-resident Indians, among others, according to the draft papers.

In 2017, AU Small Finance Bank launched its over Rs 1,900 crore initial share-sale.