Equitas Small Finance Bank IPO opens for subscription: Key things to know – Times of India

NEW DELHI: Equitas Small Finance Bank‘s Rs 500 crore initial public offering (IPO) opened for subscription on Tuesday. The issue will remain open till October 22 and the price band has been fixed at Rs 32-Rs 33 per equity share.
The IPO consists of a fresh issue aggregating up to Rs 280 crore and an offer for sale of up to 7.2 crore equity shares by Equitas Holdings Limited, the holding company of the bank.
Post this offer, Equitas Holdings share in the bank will come down to 82-83 per cent from 95.49 per cent.
Here’s are key things to know about the offer:
* At present, the bank’s capital adequacy ratio is around 21 per cent level and post the issue it will improve to 22 per cent, Equitas Small Finance Bank managing director and CEO P N Vasudevan said.
* The bank had earlier planned to raise Rs 1,000 crore through IPO but later reduced the size due to a comfortable capital adequacy ratio and also on account of the present market conditions, Vasudevan added.
* “In the original DRHP (Draft Red Herring Prospectus), we had filed for Rs 1,000 crore of (IPO) issue. Now it has been reduced by half to just over Rs 500 crore. We have adequate capital and have enough head space in tier-II (capital) to pursue growth into the short-term future without requiring additional capital. So this is one reason we reduced the issue size,” Vasudevan said.
* As per the RBI norms, the promoter of a small finance bank must reduce their shareholdings in the bank to 40 per cent from five years of operations. Equitas SFB will complete its five years of operations in September 2021.
* Vasudevan said the two routes which are under consideration for reduction of Equitas Holdings in the bank are merger and acquisition and block sale of shares by the holding company.
* When asked about plans to convert into a universal bank, Vasudevan said once the bank completes five years of operations in September next year, it would approach the Reserve Bank of India for it.
(With PTI inputs)