Rakesh Jhunjhunwala-backed banking share gains after company's subsidiary files IPO papers with Sebi

Rakesh Jhunjhunwala-backed stock surged on Monday after its confirmed to the exchanges that the subsidiary of the banking company has filed IPO papers with the Securities Exchange Board of India (Sebi).  

Shares of Federal Bank gained nearly 4 per cent to Rs 101.60 apiece in Monday's intraday trade on the BSE after the private lender said its subsidiary Fedbank Financial Services Ltd (FedFina) has filed preliminary papers with Sebi for its initial public offering (IPO). 

The draft red herring prospectus (DRHP) was filed with the capital markets regulator on February 19, 2022, Federal Bank said in a regulatory filing on Sunday. 

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" Our subsidiary Fedbank Financial Services Limited (“FedFina”) has filed its Draft Red Herring Prospectus (“DRHP”) with SEBI for the proposed Initial Public Offering (“IPO”) of its equity shares on February 19, 2022," it said in a BSE filing on Sunday.  

Billionaire investor Jhunjhunwala holds 3.7% stake or 75,721,060 equity shares to the tune of 756.1 crore of the company for the quarter ended December 2021, showed Trendlyne data.  

Federal Bank stock has given a decent return of over 20% in the last one year, showed technical data of the private bank. Shares are trading close to their 52-week high value of Rs 107.65 on the BSE. Federal Bank's 52-week low stands at Rs 70, which the shared touched in April 2022.  

FedFina IPO details 

FedFina IPO comprises a fresh issue of equity shares and offer for sale by Federal Bank and True North Fund VI LLP. 

As of February 19, 2022, Federal Bank held 23,56,85,332 equity shares aggregating to 73.31 per cent of the issued, subscribed and paid-up share capital of FedFina. 

"FedFina is proposing to undertake the IPO...Comprising a fresh issue of equity shares by FedFina aggregating up to Rs 9,000 million (Rs 900 crore) (the fresh issue) and an offer for sale of up to 1,64,97,973 equity shares by our bank and up to 2,92,16,313 equity shares by True North Fund VI LLP," Federal Bank said. 

Post the proposed IPO, FedFina would continue to be a subsidiary of Federal Bank, the lender said. 

The non-banking financial company (NBFC) offers medium term and small ticket loans against property (LAP), business loans, as well as gold loans. It has 507 branches across 15 states and union territories (UTs) in India.