Fino Payments Bank IPO opens today: 7 things retail investors should know

Fino Payments Bank Ltd on Thursday garnered Rs 538.78 crore from 29 anchor investors, ahead of its initial public offering (IPO). The offer will open for subscription on October 29 and close on November 2. Check other important details here.

Price Band

The price band has been fixed at Rs 560-577 per share.

Fresh issue and Offer For Sale

As per the company’s Draft Red Herring Prospectus (DRHP), which was filed with capital markets regulator Securities and Exchange Board of India (Sebi), the IPO will comprise a fresh issue of Rs 300 crore and an Offer For Sale (OFS) of 15,602,999 equity shares.

Fino Payments Bank is a growing fintech company offering a diverse range of financial products and services that are primarily digital and have a payments focus. The bank offers products and services to its target market, that are an unserved and underserved population of Indian society through the pan-India merchant network. Its merchant-led model is a capital-light business strategy in respect of network expansion and except for referrals of third-party loan providers. It however does not offer any lending products and does not hold credit risk for loans.

The bank commenced operations with effect from June 2017. The product and service offering includes liability products and other banking products that generate fee and commission-based income, such as CASA, micro-ATMs and AePS transactions, domestic remittances, and the issuing of debit cards.

Potential Revenue

In 2015, the RBI laid down the framework for payments banks with the objective of widening the spread of payment services and deposit products to small businesses, low-income households, migrant labor workers, and other unorganized entities by enabling high-volume low-value transactions.

The target addressable market according to CRISIL as of March 31, 2021 is approximately Rs 0.85 trillion by potential revenue. Such addressable market refers to the potential revenue pool available to companies providing CASA deposit accounts in rural and semiurban areas and also providing the entire range of payment and remittances related services across urban, semi-urban and rural areas.

Promoter

The bank's promoter is Fino PayTech Limited, which holds 100 percent shares of the Payments Bank, according to the DRHP. The offer also includes shares aggregating to Rs 3 crore reserved for employees.

The Bank, in consultation with the BRLMs, may consider a Pre-IPO Placement aggregating up to Rs 600 million. If the Pre-IPO Placement is completed, the fresh issue size will be reduced to the extent of such Pre-IPO Placement, subject to the minimum offer size.

In the event of under-subscription in the Employee Reservation Portion (if any), the unsubscribed portion will be available for allocation and allotment, proportionately to all eligible employees who have Bid in excess of Rs 200,000, subject to the maximum value of allotment made to such eligible employee not exceeding Rs 500,000

Financial Statements

The details of the capital, net worth, the net asset value per Equity Share, and total borrowings for the financial year ended March 31, 2021 are Rs 445.80 million, Rs 1,505.47 million, Rs 33.77 million, and Rs 1,807.98 million, respectively, derived from the Restated Financial Statements.