ESAF Small Finance Bank IPO Listing: All you need to know about this small finance bank IPO 

The anchor book is slated to open for a one-day window prior subscription period paving the way for the ESAF Small Finance Bank IPO subscription period that spans from November 3, 2023, to November 7, 2023. Investors can anticipate the allocation results for the ESAF Small Finance Bank IPO to be officially disclosed on Friday, November 10, 2023.

The anticipated listing date for the ESAF Small Finance Bank IPO on both the BSE and NSE is fixed for Thursday, November 16, 2023. This offering encompasses a fresh share issuance, valued at Rs 390.7 crore, directly from the company, accompanied by an offer-for-sale (OFS) worth Rs 72.3 crore, consisting of shares divested by three existing shareholders.

IPO Announcement and Target

(Commencement of ESAF Small Finance Bank’s IPO Subscription)

ESAF Small Finance Bank is set to initiate its IPO subscription process on November 3, with an ambitious fundraising target of Rs 463 crore. This announcement comes as the third public offering in the upcoming week, following the IPOs of Cello World and Honasa Consumer, the parent company of Mama Earth.

OFS Details and Employee Reservation

The divestment plan includes ESAF Financial Holdings, the promoter, releasing shares valued at Rs 49.26 crore through OFS, while PNB MetLife India Insurance Company and Bajaj Allianz Life Insurance Company will offload shares with a combined value of Rs 23.04 crore in the OFS. Notably, ESAF Small Finance Bank, headquartered in Kerala, has earmarked equity shares with a total value of up to Rs 12.5 crore for its employees.

Utilization of Fresh Issue Proceeds

The net proceeds derived from the fresh issue are poised to be channelled towards fortifying the bank’s Tier-I capital base. This allocation is strategically designed to meet the future capital prerequisites and drive business expansion, primarily within the lending domain. It’s imperative to highlight that ESAF Small Finance Bank received regulatory approval from SEBI on October 17 to advance with its IPO plans.

Financial Performance Overview

While ESAF Small Finance Bank’s operational reach spans across the entire Indian landscape, its core concentration remains in South India, particularly within the states of Kerala and Tamil Nadu. The bank operates through a vast network, boasting 700 banking outlets, 767 customer service centres, 22 business correspondents, 2,116 banking agents, 525 business facilitators, and 559 ATMs, strategically positioned across 21 states and two union territories.

Financial Growth and Asset Quality

The financial performance of ESAF Small Finance Bank has been remarkable in preceding years and has continued this trend into the initial quarter of the current fiscal year, showcasing an improving asset quality. In the fiscal year concluding in March FY23, the bank recorded an extraordinary surge of 452.4% in net profit, reaching Rs 302.3 crore compared to the previous year. Net interest income exhibited a substantial year-on-year increase of 60%, amounting to Rs 1,836.3 crore. Deposits experienced a notable uptick of 14.4%, aggregating to Rs 14,665.6 crore, while disbursements surged by 23%, reaching Rs 14,690.6 crore in comparison to the preceding year.

Continued Growth and Asset Quality Enhancement

In the quarter ending in June FY24, net profit experienced robust growth of 22.6%, reaching Rs 130 crore. Net interest income demonstrated a significant year-on-year increase of 30.5%, totalling Rs 585.5 crore compared to the corresponding period in the previous fiscal year. Furthermore, the provision coverage ratio exhibited notable improvement, climbing to 74.35% from 62% during the same period.

Asset Quality and NPA Reduction

On the asset quality front, gross non-performing assets (NPA) registered a substantial year-on-year reduction of 451 basis points, settling at 1.65%, while net NPA witnessed a significant year-on-year decrease of 297 basis points, concluding at 0.81% at the close of the June FY24 quarter.

IPO Listing Schedule (List Date and Implications)

ESAF Small Finance Bank aims to conclude the basis of IPO share allotment by November 10, with eligible investors anticipating the crediting of equity shares to their demat accounts by November 15. The commencement of equity share trading on stock exchanges is scheduled to commence on November 16, following the IPO timetable.

Position in the Small Finance Bank Landscape

Upon its listing, ESAF Small Finance Bank is poised to become the sixth small finance bank to be publicly traded, joining the ranks of AU Small Finance Bank, Ujjivan Small Finance Bank, Equitas Small Finance Bank, Suryoday Small Finance Bank, and Utkarsh Small Finance Bank.

IPO Management and Oversight

The IPO is being steered by ICICI Securities, DAM Capital Advisors, and Nuvama Wealth Management, with Link Intime India serving as the registrar to the offer.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.