Planning to invest in ESAF Small Finance Bank Ltd IPO? Read this first
Established in 1992, ESAF Small Finance Bank caters to unbanked and under-banked customers, primarily in rural and semi-urban areas. It operates through an extensive network and offers various financial products. The IPO will run until November 7, with the anchor portion opening on November 2.
ESAF Small Finance Bank Ltd has announced the price band for its upcoming initial public offering (IPO) scheduled to debut on Indian stock exchanges on November 3. The IPO is set to conclude on November 7, with the anchor portion opening on November 2. Notably, the company has revised its IPO size downward, reducing the fresh issue of equity shares from an initial target of Rs 486.74 crore to Rs 390.70 crore and the offer for sale component from Rs 142.3 crore to Rs 72.30 crore, as per the red herring prospectus.
About ESAF Small Finance Bank
Established in 1992, ESAF Small Finance Bank, or the Evangelical Social Action Forum Bank, focuses on providing banking services to unbanked and under-banked customers, particularly in rural and semi-urban areas. It is considered one of the prominent small finance banks in India, operating through a network of 700 banking outlets, 767 customer service centers, and 559 ATMs across 21 states and two union territories, serving 7.15 million customers.
The bank's assets are valued at Rs 16,331 crore. ESAF Bank offers a variety of financial products, including micro loans, retail loans, MSME loans, loans to financial institutions, and agricultural loans. It has a strong presence in Kerala, with 43% of its banking outlets located there, while it is expanding in other regions.
ESAF Small Finance Bank has demonstrated significant financial growth in recent years. The bank's assets under management nearly doubled from Rs 8,425 crore in March 2021 to Rs 16,331 crore in March 2023. Deposits also increased from Rs 8,999 crore to Rs 14,665 crore during the same period.
Revenue witnessed substantial growth, rising from Rs 1,768 crore in 2021 to Rs 3,141 crore in 2023. Simultaneously, the bank's borrowings increased from Rs 1,694 crore in March 2021 to Rs 3,354 crore in March 2023. Profitability improved significantly as well, with profits increasing from Rs 105 crore in 2021 to Rs 302 crore in 2023.
The bank maintained a CASA (Current Account Savings Account) ratio of 21.39%. In the most recent quarter, the bank generated revenue of Rs 991 crore and reported a profit of Rs 129 crore.
ICICI Securities Ltd, DAM Capital Advisors Ltd, and Nuvama Wealth Management Ltd are the book-running lead managers for the IPO. The equity shares will be listed on BSE and NSE. Promoter ESAF Financial Holdings Pvt Ltd and other shareholders, including PNB MetLife India Insurance Company Ltd and Bajaj Allianz Life Insurance Company Ltd, will be selling shares through the offer for sale.
The minimum bid is set at 250 equity shares, with the option to increase in multiples of 250 shares. Retail investors can invest a minimum of Rs 15,000 (equivalent to 250 shares) and a maximum of Rs 1,95,000 (equivalent to 3,250 shares) as they are not allowed to invest over Rs 2 lakh in the IPO.
Presently, ESAF Financial Holdings owns a 62.46% stake in the small finance bank, while PNB MetLife and Bajaj Allianz Life own 4.75% and 3.89% stakes, respectively, in the lender. The proceeds from the fresh issue will be used to strengthen the bank's Tier 1 capital base.