Equitas Small Finance Bank – Issue Highlights, All you need to know about this issue

The Bank, seeking in principle approval from RBI to undertake a merger of EHL with the Bank, such that the merger would be effective from September 4, 2021 and seeking in principle approval to permit the dilution of EHL’s shareholding in the Bank pursuant to such merger.

Issue Details:
Fresh Issue of Equity shares aggregating upto Rs 280 Crore and Offer for sale of up to 72,000,000 Equity Shares by Equitas Holdings Ltd (“EHL”).  Post Issue implied market Cap of ESFB will be Rs 3,651- Rs 3,756 Cr.

Issue summary:

The Net Issue size: Rs 510 Cr - 518 Cr, Face value is of Rs 10, Price band is Rs 32 - Rs33, Bid Lot: 450 Shares and in multiple thereof. The shares will be listed on BSE and NSE. Book Running Lead Managers are JM Financial, Edelweiss Financial and IIFL Securities. Issue opens on: Tuesday, 20th Oct’2020 and Issue closes on: Thursday, 22nd Oct’2020

Background:

ESFB is the largest SFB in India in terms of number of banking outlets, and the 2nd largest SFB in India in terms of Assets under Management (“AUM”) and total deposits in Fiscal 2019. (Source: CRISIL Report). ESFB has been able to successfully diversify their loan portfolio and significantly reduce their dependence on the microfinance business as compared to other microfinance companies that have converted to SFBs.

Their asset products include small business loans, housing loans, and agriculture loans, Vehicle Loan, MSE Loan etc. On the liability side, they offer current accounts, salary accounts, savings accounts, and a variety of deposit accounts to their clients. In addition, ESFB also provides non-credit offerings comprising ATM-cum-debit cards, third party insurance, mutual fund products, and issuance of FASTags.

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As of March 31, 2019, ESFB had the largest network of banking outlets among all SFBs in India (Source: CRISIL Report). As of June 30, 2020, their distribution channels comprised 856 Banking Outlets and 322 ATMs across 17 states and union territories in India.

(Authored by Rahul Kamdar)