ESAF Small Finance Bank IPO fully subscribed on the first day of its issue opening

 ESAF Small Finance Bank IPO fully subscribed on the first day of its issue opening

 

The Initial Public Offering of ESAF Small Finance Bank Limited was fully subscribed on the first day of bidding led by Retail and NII.

 

The issue received bids of 10,06,48,500 shares against the offered 5,77,28,408 equity shares, at a price band of ₹57-60, according to the data available on the stock exchanges.

 

Non-Institutional Investors Portion was the most subscribed with 2.44 times, followed byRetailPortion with 1.98 times, whereas Qualified Institutional Buyer Portion subscribed 0.90 times. EmployeePortion was subscribed 1.01 times. The issue kicked off for subscription on Friday, November 3, 2023 and will close on Tuesday, November 7, 2023.

 

A day prior to the opening of the issue, ESAF Small Finance Bank Ltd had raised Rs 135.15crores from anchor investors.Foreign and Domestic Institutions who participated in the anchor wereACM Global Fund VCC, Kotak Mahindra Life Insurance Company Limited, Edelweiss Tokio Life Insurance Company Limited, ICICI Prudential Life Insurance Company Limited, SBI General Insurance Company Limited, Founder Collective Fund, Ananta Capital Ventures Fund 1, Astorne Capital VCC – Arven, BNP Paribas Arbitrage, Copthall Mauritius Investment Limited, Alchemie Ventures Fund – Scheme 1.

 

Leading brokerages like LKP Securities, Sushil Finance, Hem Securities, Swastika Investmart, StoxBox, BP Equities, and Religare Broking have given a “SUBSCRIBE” rating to the issue, highlighting the bank's attractive valuation, strong return ratios, and its potential to tap into the rural segment's untapped credit opportunities. While some concerns, such as geographic concentration and intense competition, exist, the overall sentiment is favorable. The IPO is generally seen as worth considering, with recommendations to subscribe, especially for medium- to long-term investors.

 

ICICI Securities Limited, DAM Capital Advisors Limited, and Nuvama Wealth Management Limited (formerly known as Edelweiss Securities Limited) are the book-running lead managers and Link Intime India Private Limited is the registrar to the offer. The equity shares are proposed to be listed on BSE and NSE.

               

Company Information

 

ESAF Small Finance Bank is a small finance bank with a focus on unbanked and under-banked customer segments, especially in rural and semi-urban centers.

 

The Lender's primary products are advances and deposits (current accounts, savings accounts, term deposits, and recurring deposits). Its advances comprise of Micro Loans (comprising Microfinance Loans and Other Micro Loans), retail loans (such as gold loans, mortgages, personal loans, and vehicle loans), MSME loans, loans to financial institutions, and agricultural loans.

 

It has a network of 700 banking outlets (including 59 business correspondent-operated banking outlets), 767 customer service centers (operated by its business correspondents), 22 business correspondents, 2,116 banking agents, 525 business facilitators, and 559 ATMs spread across 21 states and two union territories, serving 7.15 million customers as at June 30, 2023.

 

As of June 30, 2023, 62.97% of their gross advances were directed toward customers in rural and semi-urban areas, and 71.71% of their banking outlets were located in these regions. The bank has 72% branches present in rural and semi-urban regions as of June 30, 2023.

 

As of June 30, 2023, ESAF SFB was the fifth largest SFB in India in terms of AUM. Between March 31, 2021, and 2023, the bank had the fourth-highest deposit growth among its comparable peers and the highest AUM growth. Its assets under management (AUM) grew from ₹8,425.93 crore to ₹16,331.27 crore, with a compound annual growth rate (CAGR) of 39%.

 

It reported the second highest year-on-year AUM growth for three months ended Fiscal 2024 among compared SFBs. Deposits also increased from ₹8,999.43 crores to ₹14,665.63 crores during the same period, registering a CAGR of 28%, the fourth highest growth among their peers. As of June 30, 2023, Retail Deposits were ₹13,977.27 crore, which accounted for 89.28% of the total deposits.

 

 

The table below shows subscription data for all the categories of investors:

 

ESAF SMALL FINANCE BANK LIMITED Last updated on 03 Nov 2023 | 05:00:00 PM Sr.No. Category No.of shares offered / reserved No. of shares bid for No. of times of total meant for the category 1 Qualified Institutional Buyers (QIBs) 1,58,07,017 1,42,94,750 0.90 1(a) Foreign Institutional Investors (FIIs) - - - 1(b) Domestic Financial Institutions(Banks/ Financial Institutions(FIs)/ Insurance Companies) - 1,41,69,750 - 1(c) Mutual Funds - - - 1(D) Others - 1,25,000 - 2 Non Institutional Investors(NIIS) 1,18,55,264 2,89,11,250 2.44 2.1 Non Institutional Investors(Bid amount of more than Ten Lakh Rupees) 79,03,509 1,58,43,500 2.00 2.1(a) Corporates - 50,250 - 2.1(b) Individuals (Other than RIIs) - 1,32,80,000 - 2.1(c) Others - 25,13,250 - 2.2 Non Institutional Investors(Bid amount of more than Two Lakh Rupees and upto 10 lakh rupees) 39,51,755 1,30,67,750 3.31 2.2(a) Corporates - 43,500 - 2.2(b) Individuals (Other than RIIs) - 1,18,35,000 - 2.2(c) Others - 11,89,250 - 3 Retail Individual Investors (RIIs) 2,76,62,281 5,46,99,000 1.98 3(a) Cut Off - 4,83,48,750 - 3(b) Price Bids - 63,50,250 - 4 Employee Reserved 24,03,846 24,33,250 1.01 4(a) Employee (Cut off) - 19,34,000 - 4(b) Employee (Price) - 4,99,250 - 5 Reservation PortionShareholder - - - 5(a) RPS (Cut off) - - - 5(b) RPS (Price) - - - Total 5,77,28,408 10,03,38,250 1.74