One of India's leading Small Finance Bank, Utkarsh Small Finance Bank Ltd has filed its papers with the regulator to raise an aggregate of Rs. 1350 Cr via Initial Public Offering. The public issue of shares of face value of Rs 10 each, comprises of a fresh issue amounting to Rs 750 Cr and an Offer for Sale aggregating up to Rs. 600 Cr by selling shareholder Utkarsh Coreinvest Ltd.
The portion reserved for Qualified Institutional Buyers will be upto 75% of the offer, Non-Institutional Investors to have upto 15% of the portion reserved while upto 10% will be reserved for the Retail Investors.
As stated in the DRHP, the company intends to utilize the net proceeds from the fresh issue to augment its tier 1 capital base to meet future capital requirements arising out of growth in its assets, i.e Loans and Advances. The company may consider raise Rs. 250 Cr through a pre IPO placement which would be in consultation with the appointed lead managers to the issue.
The fast growing Varanasi headquartered company, who's SFB was incorporated in 2016 and commenced operations in 2017, is one of the most profitable small finance banks in the country as on FY 2020, according to the CRISIL report. Utkarsh, having a deep understanding of the microfinance segment started its operations in 2010 as NBFC and thereafter converted to a NBFC MFI with a focus to provide joint liability group, small ticket size income generating loans, micro enterprise loans to economically active poor women.
As on September 30, 2020, the retail and technology focused, small finance bank across 528 banking outlets has served 2.74 million customers majorly located in rural and semi urban areas in the states of Bihar, Uttar Pradesh and Jharkhand that has a significant untapped market. Its deposits and disbursements have grown at a CAGR of 54.48% and 33.66% respectively, between FY 18-20 and as on March 31, 2020 had the lowest gross and net NPA ratios amongst its SFB peers. The bank which has a comfortable liquidity profile, strong capital base, low cost to income ratio has a product suite that includes range of deposit products including savings accounts, salary accounts, current accounts, recurring and fixed deposits and locker facilities as well as diversified liability products targeting senior citizens, middle class individuals, self-employed and salaried individuals who can also transact/interact/engage via mobile and internet banking services.
Between FY17-20 Small Finance banks have registered an AUM growth rate of 30% CAGR and the loan portfolio is expected to see a growth of 22% in the near term.
Recently Aavishkaar backed leading NBFC MFI, Arohan Financial Services also filed to raise 1800 crs via an Initial Public Offering. The Kolkata based company serves 2.21mn borrowers across 17 states and stands to be the largest NBFC MFI in eastern india as per its gross loan portfolio.
ICICI Securities Ltd., IIFL Securities Ltd. and Kotak Mahindra Capital Company Ltd. are the BRLMS to the Issue.