ESAF Small Finance Bank refiles IPO paper, lowers issue size to Rs 629 cr

ESAF Small Finance Bank has refiled preliminary papers with capital markets regulator Sebi to raise Rs 629 crore through an initial public offering (IPO).

The lender has cut down the issue size, which now comprises fresh issue equity shares aggregating to Rs 486.74 crore and an offer for sale (OFS) of Rs 142.3 crore, according to the draft red herring prospectus (DRHP) available with Sebi on Monday.

Those selling shares in the OFS are promoter -- ESAF Financial Holdings Private Ltd and other shareholders -- PNB MetLife India Insurance Company Ltd, Bajaj Allianz Life Insurance Company Ltd.

At present, ESAF Financial Holdings owns a 62.46 per cent stake in the small finance bank, while PNB MetLife and Bajaj Allianz Life owns 4.75 per cent and 3.89 per cent stake in the lender, respectively.

Proceed of the fresh issue will be utilised to augment the bank's Tier 1 capital base.

The fresh filling came after ESAF Small Finance Bank's managing director and chief executive K Paul Thomas in November 2022 stated that the lender is looking to refile its IPO with a lower issue size, which will hit the market in FY24.

The lender had in October 2021 filed for a Rs 998 crore IPO which was to include Rs 800 crore of primary issuance and also an OFS of Rs 198 crore from existing investors. However, the same lapsed as it was to be done within a year.

ESAF Small Finance Bank is one of the leading small finance banks in India in terms of client base size, yield on advances, net interest margin, assets under management compound annual growth rate (CAGR), total deposit CAGR, loan portfolio concentration in rural and semi-urban areas and ratio of micro loan advances to gross advances.

The bank's assets under management (AUM) grew to Rs 16,331.26 crore as on March 2023 from Rs 8,425.93 crore as on March 2021, registering a CAGR (compound annual growth rate) of over 39 per cent. Its deposits rose to Rs 14,665.62 crore in March 2023 from Rs 8,999.42 crore in March 2021, translating into a CAGR of nearly 28 per cent.

ICICI Securities, DAM Capital Advisors Ltd and Nuvama Wealth Management Ltd have been appointed as merchant bankers to advise the bank on the IPO.

The equity shares of the bank will be listed on BSE and NSE.