Thrissur-based CSB Bank — earlier known as Catholic Syrian Bank — will soon announce an Initial Public Offering (IPO) of its shares, at a price band of Rs 193-195, thus valuing the lender at Rs 3,400 crore.
The IPO opens this Friday and closes on November 26.
It will consist of a new issue up to Rs 24 crore and an Offer for Sale of up to 19,778,298 equity shares. Lead managers to the offer are Axis Capital and IIFL Securities.
Three insurance companies — HDFC Life, ICICI Prudential and Edelweiss Tokyo Life — will exit after selling their stakes. Indo-Canadian billionaire Prem Watsa’s Fairfax India, which has 50.09 per cent of the equity, will see its stake falling to 49.74 per cent.
C V R Rajendran, managing director of CSB, said: “The Reserve Bank of India (RBI) has given our promoters a 15-year time period to reduce stake to 15 per cent. They have five years to reduce stake to 40 per cent, 10 years to reduce to 30 per cent, and 15 years for bringing down stake to 15 per cent.”
This IPO is mainly to meet the regulatory requirement. RBI had asked the Bank to list on the bourses by September but this was delayed due to procedural issues. Rajendran says the bank has sufficient capital and will not need more in the next three to four years. “The capital which we have we will use to expand our branches in North India,” he said.
We will boost our presence in New Delhi and Punjab, and then move to Uttar Pradesh and Bihar.
Earlier, RBI asked CSB to not expand its branch numbers before listing. So, once the listing is done, the bank says it will focus on expanding gold loan branches, in the coming two to three years. Gold loans are a third of its total loan book. The retail loan (to individuals) book is 47 per cent of the total, while the wholesale book is 25 per cent.
At a press conference, Rajendran said: “The bank is going slow on deposits as we have surplus liquidity. However, we will continue to focus on gaining current and savings account deposits, which will help the net interest margins.”
Adding: “We have hired new manpower from different backgrounds, to change the working culture. We will add workforce to run the expanded operations.”
It expects strong growth from the micro, small and medium enterprises sector, currently affected by liquidity crunch at non-banking finance companies. Rajendran says: “We will go forward with our loan sourcing. Our major constrainr comes from the sourcing capabilities. We are hiring special teams to work on this.” The bank hired 1,350 employees in the past 18 months.