Suryoday Small Finance Bank is about to launch its IPO to boost Rs. 580 crore. The offering will aid the bank to meet its regulatory listing requirements. The bank will look to sell 81.5 lakh shares as a part of the offering, with an extra offer purchasable of up to 1.09 crore shares, adding up to 17.99% of paid-up equity. Employees of the bank will have 5 lakh shares reserve
Suryoday Small Finance Bank has already completed a pre-IPO placement to boost around Rs. 150 crores at a price of Rs. 291.75 per share from investors along with Axis Flexi Cap Fund, SBI life assurance, Kiran Vyapar Ltd., and Axis Equity Hybrid Fund.
According to the bank’s red herring prospectus, the fundraising will help Suryoday Small Finance Bank to reinforce its capital base. As of New Year’s Eve, the bank’s capital adequacy ratio stood at 41.17%, where Tier-1 capital constituted 34.3%. Further, small finance banks are required to list within three years of reaching a net worth of Rs 500 crore, as per the Federal Reserve Bank of India (RBI) guidelines governing these lenders. The bank had crossed the milestone in November 2017, making it necessary to list by November 2020. The bank had applied to the RBI for an extension of the timeline for listing till May 31, 2021. However, the RBI rejected the request and asked it to finish its listing at the earliest, consistent with the prospectus.
Started in 2008 as Suryoday Micro Finance Pvt Ltd., the lender was granted a little finance bank license in 2016. After a year, it started commercial operations according to RBI’s guidelines. As of New Year’s Eve, the bank had a customer base of 14.4 lakh, with 4,770 employees and 554 banking outlets. Total advances at the top of the third quarter stood at Rs 3,782 crore, where metropolitan and urban areas contributed to just about 65% of the loan book. Its lending business is spread across microfinance, commercial vehicle loans, affordable housing loans, small business loans, and unsecured loans to micro, small and medium enterprises (MSMEs). Suryoday Small Finance Bank’s net unsecured loan book has fallen to 74.59% as of New Year’s Eve, as compared with 94.81% when it commenced its operations in fiscal 2017-18.