Small finance bank (SFB) licensee Ujjivan Financial Services' initial public offering (IPO) was oversubscribed 40 times, with strong demand from all segments of investors. The 29.7 million shares on offer saw bids for 1.2 billion shares worth Rs 25,200 crore, despite no participation by foreign investors. At the top end of the price band of Rs 210, the IPO size translated into Rs 887 crore.
The qualified institutional buyer portion was subscribed nearly 34 times, while the non-institutional buyer (high net worth individual) segment saw subscription of 135 times. The retail institutional segment, for those investing up to Rs 2 lakh, garnered subscription of nearly four times. "There was high level of excitement for small finance bank IPOs. The business model is that of financial inclusion and they have already built successful models. This has generated a strong level of interest among investors," said V Jayasankar, senior executive director & head of equity capital markets, Kotak Investment Banking.
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Like Equitas, Ujjivan's IPO, was to reduce foreign institutional investors (FIIs) ownership. The RBI has set an investment limit of 49 per cent for FIIs in an SFB. The FII holding in Ujjivan is likely to fall from the current 77 per cent to below 45 per cent after the IPO. The IPO comprised a secondary share sale by existing foreign investors, worth Rs 500 crore. The company issued fresh equity worth Rs 358 crore in the IPO, which will shore up its capital base. Ujjivan is the country's fourth largest micro finance institutions in assets under managements.
At Rs 210, Ujjivan is valued at 1.8 times its estimated book value for 2015-16. The valuations are lower than Equitas, which trades at 2.8 times and SKS Microfinance, which trades at nearly six times.