Fino Payments Bank subscribed two times on last day, HNI response tepid

IPO was Rs 300 crore fresh fund raise, Rs 900 crore secondary share sale by promoter Fino Paytech; bank will use fresh proceeds to augment tier-1 capital base

The initial public offering (IPO) of Fino Payments Bank garnered lukewarm response with the issue getting subscribed just two times on Tuesday, the concluding day of the issue. The institutional portion was subscribed 1.65 times, the wealthy investor portion by 21 per cent, the retail investor portion was subscribed close to six times, and the portion reserved for employees by 93 per cent.

Fino Payments Bank had priced its IPO between Rs 560-577 per share.

The IPO consisted of Rs 300 crore of fresh fund raise and Rs 900 crore of secondary share sale by promoter Fino Paytech. The bank will use the fresh proceeds to augment its tier-1 capital base to meet its future capital requirements.

Fino Payments Bank’s parent Fino Paytech counts BPCL (22.9 per cent stake), Blackstone (15.1 per cent), ICICI Prudential Life (9.1 per cent), Intel Capital (5.7 per cent) as its shareholders.

Fino Paytech currently holds 100 per cent stake in Fino Payments Bank. Following the IPO, its stake will decline to 75 per cent. At the top-end of the price band, Fino Payments Bank will have a market cap of Rs 4,800 crore.

This will be the first IPO of a payments bank. PayTM, which too has a payments bank license, will launch next week.

“The company exists in a stiff competitive environment where companies like PayTM Payments Bank and India Post Payments bank exist and outperform in many aspects. We thus believe that the current growth momentum is difficult to sustain in the long term. Hence we give an “AVOID” rating to this IPO,” BP Wealth said in a note.

Bulk of Fino Payments Bank revenues come from fee income and it follows an asset-lite model. It offers services like remittances, micro-ATM, business correspondent (BC) banking, Aadhaar Enabled Payment System (AEPS) and third party products distribution.

In FY21, Fino Payments Bank reported gross revenues of Rs 780 crore and net profit of Rs 20.5 crore.