ESAF SFB to refile IPO prospectus with Sebi; eyes listing in H2 of FY24

Pegs capital need at Rs 1,000 cr for three years

ESAF Small Finance Bank will need additional capital of about Rs 1,000 crore for three years and expects to float an initial public offering (IPO) in the second half of the current financial year (FY24).

The Kerala-based SFB would file a prospectus for IPO with the Securities and Exchange Board of India (Sebi) with FY23 financials, as the timeline based on earlier filings has lapsed.

Its capital adequacy ratio was 18.64 per cent in March 2022, down from 24.23 per cent at end of March 2021. SFBs are required to maintain a minimum CAR of 15 per cent.  

Gireesh C P, its chief financial officer, said besides IPO for equity capital raise this year, the bank is also exploring tier II bond issuance.  There may be another round of capital raise two year down the line.

K Paul Thomas, its managing director and chief executive, ESAF SFB said its overall credit growth of the bank is 30 per cent including managed advances in FY23. Bank would grow at 25-30 per cent on both asset and liability side in the current financial year (FY24).

Bank which started as Micro-Finance Institution (MFI) has seen the share of micro-loans in its credit portfolio coming down to 71 per cent at the end of March 2023 from 81 per cent a year ago. In contrast, the gold loan book has grown to 14 per cent.  

As for raising resources (deposits), Thomas said there is pressure from heavy competition and despite challenges, deposits grew by 14 per cent in FY23.

The share of low cost deposits – current account and savings account (CASA) – declined marginally to 21 per cent at the end of FY23 from over 22 per cent a year ago. It would improve further as business is stabilising especially in Kerala, MD & CEO said.

It opened 125 branches in FY23, a big jump from 25 that it set up in FY22. Bank would open 50 branches in the current financial year. The network had 700 branches at the end of March 2022.