Equitas Small Finance files for IPO

Micro lender, Equitas Small Finance Bank, has initiated the process of share sale to general public and thus get listed on the bourses.

On Monday, Equitas has filed draft red herring prospectus with the markets regulator, becoming the third small finance bank to file for an initial public offering (IPO).

The IPO will be a combination of fresh issue and offer for sale, according to the red herring prospectus filed by the microlender.

The Chennai-based microlender is looking to raise Rs 500 crore as fresh capital to augment its tier – 1 capital base and to meet future capital requirements, such as organic growth and expansion.

Through the offer for sale route, the lender’s publicly-listed promoter entity Equitas Holdings Ltd (EHL) plans to sell another 80 million shares.

Collectively, the IPO size is expected to be around Rs 1,000 crore, two people aware of the development said, requesting anonymity.

The development comes after Ujjivan Small Finance Bank made a bumper debut on the bourses last week, after witnessing a massive subscription of more than 165 times in its Rs 750 crore IPO. The bank’s shares listed with over 50% gain on 12 December.

Equitas started its operations in 2007 as a non-banking financial company, Equitas got its licence to operate as a small finance bank from the Reserve Bank of India (RBI) on 30 June 2016 and started operating as an SFB on 5 September 2016.

The bank offers a range of lending products including, small business loans comprising loans against property, housing loans and agriculture loans to micro-entrepreneurs.

It also gives microfinance to joint-lending groups, mainly comprising women, along used and new commercial vehicle loans to drivers and micro-entrepreneurs typically engaged in logistics, micro and small enterprise (MSE) loans to proprietorships, and corporate loans.

As of 30 September, its distribution channels comprised 853 Banking Outlets and 322 ATMs across 15 states and union territories in India.

As of six months ended 30 September, the bank’s total loan disbursements stood at Rs 4,426 crore and retail deposits stood at Rs 2,608 crore.

Recently in December 2019, the promoters made a private placement of 4.74 crs shares at Rs 52.68 aggregating Rs 250 crs to large funds and investors of Equitas SFB.

We believe that with NBFCs facing liquidity crisis and funding issues small finance banks would grow faster as they largely cater to the MSME and SME segments of the markets where demand is quite huge and growing

Hence net net prospects of Equitas SFB look quite encouraging and investors are keenly awaiting this IPO after the grand listing of Ujjivan SFB earlier.

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