ESAF Small Finance Bank (SFB), a prominent player in the Indian financial sector, is set to launch its initial public offering (IPO) on Friday, November 3, running through Tuesday, November 7. The IPO consists of a fresh equity issue worth ₹391 crore and an offer-for-sale (OFS) of ₹72 crore by ESAF Financial Holdings, PNB MetLife (NYSE:MET), and Bajaj Allianz (ETR:ALVG) Life, totaling ₹463 crore.
The bank has chosen a price band of ₹57-60 per share for the IPO, with allocations set at 50% for qualified institutional buyers, 35% for retail investors, and 15% for non-institutional investors. The proceeds from the IPO are expected to enhance the bank's Tier–I capital base.
ESAF SFB has seen impressive growth in its assets under management (AUM), which increased at a compound annual growth rate (CAGR) of 39.22%, reaching ₹16,331 crore between FY21-23 - the highest among peers. For Q2, income rose by 34% year-on-year to ₹992 crore, while net profit increased by 22% to ₹130 crore (INR100 crore = approx. USD12 million). The bank's gross NPAs fell to 1.65%, and Net NPAs stand at 0.81%.
The bank's operations primarily target rural and semi-urban areas, offering a range of services including micro loans, retail loans, MSME loans, loans to financial institutions, and agricultural loans. As of June 30, 2023, it served 7.15 million customers through a network that spans across 21 states and two union territories in India, predominantly in South India.
Small finance banks in India account for about 13% of total AUM and are projected to grow at a CAGR of 22-24% between June 2023 and March 2025. The current Grey Market Premium (GMP) for ESAF SFB's IPO is ₹9.
ICICI Securities, DAM Capital Advisors, and Nuvama Wealth Management are the book running lead managers for the IPO, with Link Intime India serving as the registrar.
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