Suryoday Small Finance Bank plans up to Rs 1,000 crore IPO by next year

Ahead of this, the SFB will raise Rs 65 crore via increase in promoter shareholding from 27% currently, to 30% by this August

Illustration: Ajay Mohanty

Mumbai-based Suryoday Small Finance Bank (SSFB) is upping the ante in terms of retail banking expansion, ahead of its initial public offer (IPO) next year. 

Baskar Babu, MD and CEO of the small finance bank (SFB), said that it has planned to raise anywhere between Rs 600 crore and Rs 1,000 crore through the IPO next year. 

"We will begin preparing for the IPO by December 2019. We are aiming for the IPO by September next year. We are looking to raise Rs 400 crore through offer for sale (OFS) but with fresh equity infusion it will be somewhere around Rs 600 crore to Rs 1,000 crore," said Babu, while adding that the OFS is aimed at meeting regulatory norms.
Ahead of this, the small finance bank (SFB) is raising Rs 65 crore through increase in promoter shareholding from current 27 per cent to 30 per cent by August this year. This is again part of an attempt to meet regulatory norms over promoter shareholding in SFBs.

Amidst plans for the IPO, Suryoday SFB is looking to ramp up its retail banking outlets from current 382 to 600 by March 2020. Apart from newer outlets, the plan includes converting around 210 existing MFI outlets into banking outlets to offer services like deposits. Suryoday SFB currently operates in 10 states and two union territories, servicing over 1.25 million customers.

Babu stated that the company is looking to grow its assets under management (AUM) from Rs 3,100 crore to Rs 4,500-5,000 crore by the end of fiscal 2019-20. On the other hand, deposits are expected to grow from Rs 1,800 crore now to Rs 3,500-4,000 crore by end of March 2020.

What's more, as part of its AUM growth, Suryoday SFB intends to tap the small ticket loans in the range of Rs 1 lakh and Rs 3 lakh from small businessmen. Suryoday SFB has already been offering retail loans such as affordable home loans, business loans and commercial vehicle loans for the customers at interest rates of around 10.5 per cent. 

The bank will continue to focus on providing banking services and microfinance loans at rates of 21-24 per cent to the unbanked customers and apart from onboarding corporate salary accounts for medium and large corporates. "We intend to bring down these interest rates to sub-20 per cent in the next few months," Babu added.