Fino Payments Bank has received market regulator Sebi's go-ahead for an initial public offering (IPO). According to market sources, the IPO is expected to raise Rs 1,300 crore. The fintech bank, which filed preliminary IPO papers with Sebi in the last week of July, obtained its observations on 1st October, an update with Sebi showed on Monday.
Sebi's observations are necessary for any company to launch public issues like IPO, follow-on public offer (FPO) and rights issue.
Going by the draft papers, the fintech bank proposed to utilise the net proceeds from the fresh issue towards technology and digital initiatives.
FPBL is a scheduled commercial bank serving the emerging India market with its digital based financial services. The company is a fully owned subsidiary of Fino Paytech Limited (FPL), a pioneer in technology enabled financial inclusion solutions. FPL is backed by marquee investors like Blackstone Group, ICICI Group, Bharat Petroleum, Mauritius-based Headland Asian Ventures Fund 3 Ltd (HAV 3 Holdings), and World Bank Arm International Finance Corporation (IFC), amongst others.
The fintech bank turned profitable in the fourth quarter of FY20 and has consistently made profits for seven consecutive quarters. This makes FPBL the first profitable fintech to file for an IPO.
Over the last few years, FPBL has witnessed a steep surge in transaction volumes on the back of digitization and proliferation of its banking points. As stated in the DRHP, in FY21 the payment bank's platform has facilitated more than 434 million transactions having a gross transaction value of Rs 1.32 lakh crores. It has a strong leadership position in the fintech industry having the largest network of micro ATMs as of March 2021 with a market share of 55%, a robust merchant network of 6.4 lakhs and 25.7 lakh bank accounts.
Digital based transaction focused approach with no credit risk have enabled the growth of FPBL in times wherein financial sector was looming over challenges. Its revenue for FY21 stood at Rs. 791 crores that grew at a CAGR of 29% in last three years. The bank registered a profit of Rs. 20.5 crores in FY21 with an annual average ROE of 15%, the DRHP states.
Other leading digital payment firms like Paytm and MobiKwik have also filed DRHP in the mid of July 2021, and are yet to receive a nod from Sebi on their IPO to raise Rs 16,600 crore and Rs 1900 crore respectively.
Investment bankers appointed to the issue are Axis Capital Ltd, CLSA India Pvt Ltd, ICICI Securities Ltd and Nomura Financial Advisory Services Pvt Ltd.