Fairfax-controlled CSB Bank, formerly known as Catholic Syrian Bank, has announced the launch of a Rs 410-crore initial public offering (IPO). The Kerala-based private lender has fixed a price band of Rs 193-195 for the offer, likely to hit the market between November 22 and 26.
The bids for the offer can be applied for a minimum of 75 shares and its multiples.
The proposed IPO will see the CSB Bank raise fresh capital worth Rs 24 crore. The existing shareholders, including ICICI Lombard General Insurance, HDFC Life Insurance, ICICI Prudential Life Insurance, The Federal Bank, Bridge India Fund, Satellite Multicomm, Way2Wealth Securities and Edelweiss Tokio Life Insurance, will sell 19.78 million shares for Rs 385.71 crore through the offer for sale route.
According to CSB Bank's draft red herring prospectus (DRHP), the proceeds will augment its tier-1 capital base and meet future capital requirements. While 75 per cent of the offer is kept aside for qualified institutional buyers (QIBs), 15 per cent is reserved for non-institutional investors and 10 per cent for retail investors.
The leading managers for the issue are Axis Capital and IIFL Securities.
For the six months ended September 30, the CSB reported a revenue of Rs 817 crore. The profit for the first half of FY20 stood at Rs 44.3 crore, reversing the loss of Rs 65.7 crore reported in FY19.
Bank’s gross non-performing assets (NPA) stood at 2.86 per cent of its total advances, declining from 4.87 per cent as of March 31. The bank’s total NPA provisioning and write-offs stood at Rs 271 crore during the September quarter, against Rs 1,131 crore provisioning and write offs between FY17-19.
The CSB Bank and FIH Mauritius Investments Ltd (FIH-M) entered into an Investment Agreement on February, 2018 which was modified on October 15, 2018, pursuant to Fairfax agreed to acquire shares up to 51 per cent of the post issue paid-up capital of the Bank.
The Reserve Bank of India had approved the first stake sale of an Indian bank to a foreign non-banking entity in July last year. According to the RBI condition, Fairfax cannot dilute its shareholding below 40 per cent for five years and within the period, if the Bank needs additional capital, Fairfax has to provide it without increasing the shareholding of 51 per cent, said sources. During this period, Fairfax cannot transfer shares without the approval of the Board, as per the amended article of association.
Fairfax agreed to invest around Rs 1,200 crore billion in the Bank. Post receipt of requisite approvals, the Bank on October 19, 2018 allotted securities on a partly paid basis (1,98,32,130 Partly Paid Equity Shares and 6,64,63,329 compulsorily convertible Warrants) as per the terms of the Offer, Reserve Bank of India letter dated July 12, 2018 and extant FEMA guidelines.