ESAF Small Finance Bank files DRHP for Rs 976 crore IPO with Sebi

Kerala based ESAF Small Finance Bank filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for an Initial Public Offering (IPO) of Rs 976 crore on Monday.

According to the DRHP, the IPO comprises a fresh issue worth Rs 800 crore and an Offer for Sale (OFS) amounting to Rs 176.2 crore.

The bank, in consultation with its Book Running Lead Managers (BRLMs), might also consider a pre-IPO placement of Rs 300 crore, which will be reduced from the fresh issue, the DRHP indicated.

The BRLMs to the offer are Axis Capital Limited, Edelweiss Financial Services Limited, ICICI Securities Limited and IIFL Securities Limited.

According to the DRHP, about 75 per cent of the offer will be available for allocation to Qualified Institutional Buyers (QIBs) and 15 per cent on a proportionate basis to non-institutional bidders. The remaining 10 per cent of the offer is marked for retail individual bidders.

The bank said that the net proceeds from the fresh issue will be used to augment the Tier-1 capital, which includes loans, advances and investment portfolio, to meet future capital requirements. 

While the bank's microfinance loans accounted to 95.75 per cent of the total gross advances, its loan book outside Kerala has grown from Rs 549 crore in March 2017 to Rs 2,540.245 crore as on September 30, 2019 which is 48.46 per cent of its total microfinance loan book size. The total gross advance on September 30, 2019 stood at Rs  5,474.235 crore. 

As the bank stressed that it will continue to focus on rural and semi-urban franchisees, increasing deposits across NRIs and CASA, its net profit spiked from Rs 240.60 million in September 2018 to Rs 924.40 million in September 2019. The interest earned also rose from Rs 472.258 crore in September 2018 to Rs 660.683 crore in September 2019.

The bank currently serves 3.73 million customers in 16 states and a union territory through a network of 403 branches and 38 ultra-small branches.