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 ESAF Small Finance Bank IPO: A Guide to the Offering

ESAF Small Finance Bank IPO: A Guide to the Offering

Introduction: ESAF Small Finance Bank Limited IPO

ESAF Small Finance Bank, a renowned player in the banking sector, has recently launched its Initial Public Offering (IPO), making waves in the market. In this blog, we’ll explore the details of this offering, from the price band to the subscription status. So, if you’re considering investing in this IPO, read on to get the scoop.

ESAF Small Finance Bank IPO Overview

ESAF Small Finance Bank IPO is a book-built issue worth Rs 463.00 crores. It comprises a combination of a fresh issue of 6.51 crore shares, amounting to Rs 390.70 crores, and an offer for sale of 1.2 crore shares, totaling Rs 72.30 crores.

Important Dates

The ESAF Small Finance Bank IPO opened for subscription on November 3, 2023, and will close on November 7, 2023. The allotment of shares is expected to be finalized on Friday, November 10, 2023. The tentative listing date on BSE and NSE is set for Thursday, November 16, 2023.

Price Band and Lot Sizes

The IPO is priced in the range of ₹57 to ₹60 per share. The minimum lot size for an application is 250 shares. Retail investors need a minimum investment of ₹15,000 to participate in this offering. Specially categorized Non-Institutional Investors (sNII) must apply for 14 lots (3,500 shares), equivalent to ₹210,000, while bNII should go for 67 lots (16,750 shares), amounting to ₹1,005,000.

Reservation for Employees

A noteworthy feature of this IPO is the reservation of up to 2,283,653 shares for employees, offered at a discount of ₹5 to the issue price.

Lead Managers and Registrar

ICICI Securities Limited, Dam Capital Advisors Ltd (formerly IDFC Securities Ltd), and Nuvama Wealth Management Limited are the book running lead managers of the ESAF Small Finance Bank IPO, with Link Intime India Private Ltd serving as the registrar for the issue.

ESAF Small Finance Bank IPO Lot Size

Investors can bid for a minimum of 250 shares and in multiples thereof. Retail investors and High Net Worth Individuals (HNI) have specific investment limits in terms of shares and amounts.

IPO Allocation Details

ESAF Small Finance Bank IPO offers a total of 77,366,987 shares, with allocations as follows: 15,016,669 (19.41%) to Qualified Institutional Buyers (QIB), 11,262,500 (14.56%) to Non-Institutional Investors (NII), 26,279,167 (33.97%) to Retail Individual Investors (RII), 2,283,653 (2.95%) to employees, and 22,524,998 (29.11%) to Anchor investors. In case of oversubscription, 105,116 RIIs will receive a minimum of 250 shares, while 1,072 (sNII) and 2,145 (bNII) will receive a minimum of 3,500 shares.

Promoter Holding

The Promoters of ESAF Small Finance Bank are Kadambelil Paul Thomas and ESAF Financial Holdings Private Limited. The shareholding pre-issue stands at 74.43%, which will decrease to 62.64% post-issue.

Anchor Investors

ESAF Small Finance Bank IPO raised Rs 135.15 crore from anchor investors, with the anchor bid date on November 2, 2023.

About ESAF Small Finance Bank

ESAF Small Finance Bank, established in 1992, primarily focuses on providing loans to rural and semi-urban customers. The bank offers a variety of products, including Micro Loans, retail loans, MSME loans, loans to financial institutions, and agricultural loans. As of March 2023, the bank boasts a network of 700 outlets, 743 customer service centers, 20 business correspondents, and 481 business facilitators, with 581 ATMs located across 21 states of India.

Financial Performance

As of March 2022, ESAF Small Finance Bank had employed 4,100 people. Its revenue increased by 46.29%, and profit after tax (PAT) rose by an impressive 452.39% between the financial years ending on March 31, 2023, and March 31, 2022.

Key Performance Indicators

The market cap for ESAF Small Finance Bank IPO is Rs 3,087.54 crores, and its Price/Earnings (P/E) ratio is 8.94.

Objectives of the Issue

The Net Proceeds from the IPO will be used to augment the Bank’s Tier-I capital base, primarily to meet future capital requirements resulting from the bank’s asset growth, such as loans and investments. Additionally, it will help ensure compliance with regulatory requirements on capital adequacy set by the RBI.

ESAF Small Finance Bank IPO Review

Financial experts believe that based on annualized FY24 earnings, the issue appears attractively priced. This equity float will provide the company with the flexibility to expand its branches and relax regulations. Investors may consider parking their funds in this IPO for medium to long-term rewards.

Subscription Status

As of November 3, 2023, the ESAF Small Finance Bank IPO is subscribed 1.85 times. The public issue saw subscriptions of 2.12 times in the retail category, 0.95 times in the QIB category, and 2.58 times in the NII category.

In conclusion, the ESAF Small Finance Bank IPO presents a compelling investment opportunity in a bank with a strong presence in rural and semi-urban areas, impressive financial performance, and potential for growth. If you’re considering participating, ensure you meet the investment requirements and act before the subscription deadline on November 7, 2023.

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