ESAF Bank IPO will hit the primary market on Oct 20. Should you Subscribe ?

No one could forget the IPO wave, the Indian primary market has witnessed in September as three of them delivered more than 100% returns on the listing day and continued to sustain at upper levels. The October month didn’t performed at par in the IPO Segment as Angel Broking and UTI AMC were listed at discount and Mazagon Dock shipbuilders didn’t reach the 100% listing gains elite club despite having strong premium in the grey market. The IPO wave has started again and Equitas Small Finance Bank is going to open for issue on October 20.

The issue size of 518 crores considering the upper price band is a mix of offer for sale and fresh issue. The object of the offer for sale is to allow shareholders to sell an aggregate of 7.2 crores shares having FV Rs. 10 at an aggregate of Rs. 238 crores. The company has planned to raise fresh capital comprising aggregating up to Rs. 280 Cr. The net proceeds from the issue will be utilized for augmenting Bank’s Tier 1 capital base to meet future capital requirement.

ESAF IPO Details:

  • Issuer Company: Equitas Small Finance Bank Limited
  • Industry: Bank
  • IPO Size: 518 cr.
  • Price Band: 32-33
  • Issue Open Date: 20 Oct, 20
  • Issue Close Date: 22 Oct, 20
  • Listing Date: 02 Nov, 20
  • Status: Upcoming
  • Minimum Lot Size: 450 shares
  • Employee Discount: NA
  • Face Value: 10 RS. Per share
  • Retail Allocation: 35%
  • Exchange: NSE, BSE

Company Overview

Equitas Small Finance Bank is the new age social bank which focuses on expanding the banking horizon to new unbanked/underbanked area. The bank had started its journey in 1992 as a Non-Government Organization with a vision of vision of sustainable and holistic transformation of the poor and the marginalized. After evaluating the contributions and significance of ESAF in the development of rural and unreached segments of the nation, the Reserve Bank of India issued an in-principle license to ESAF Microfinance and Investments Pvt. Ltd. to set up a new Small Finance Bank during October, 2015.

As per the CRISIL report, ESAF, the subsidiary of Equitas Holdings is the largest small finance bank in India considering banking outlets and the 2nd largest small finance bank considering assets under management and total deposits. The microfinance bank provides loans for housing, vehicles and micro and small enterprises. In addition with loan disbursement, the microfinance bank provides facilities of salary accounts, current accounts, mutual fund products, third party insurance and ATM-cum-Debit cards.

Peer Comparison

The IPO belongs to that kind of sector which is full of players with enough potential and strong financials. The microfinance bank will face tough competition after listing and investors should give a second thought on inculcation of the small finance bank in the portfolio. In the listed space, the competitors of the ESAF are Credit Access Grameen Bank, Spandana Spoorthy, AU Small Finance Bank and Bharat Financial Inclusion.

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