On May 9, Fincare Small Finance Bank (Fincare SFB) filed a draft red herring prospectus with Securities Exchange Board of India to raise ₹1,330 crore through an initial public offering (IPO).
Fincare is a “digital-first” SFB who caters to the unbanked and under-banked customers, mainly in rural and semi-urban areas.
The IPO comprises new issuance of shares worth ₹330 crore and an offer for sale of ₹1,000 crore by the bank’s main promoter- Fincare Business Services Ltd. Fincare Business has 78.57% issued, subscribed and paid-up equity share capital in the bank.
Fincare SFB proposes to use the money generated by the fresh issuance towards augmenting its Tier-1 capital base so that it can meet its future capital requirements, as per bank’s Draft Red Herring Prospectus (DRHP).
The bank is likely to, in consultation with Managers (to the IPO), consider a pre-IPO Placement of a sum upto ₹200 crore, the DRHP said.
Motilal Oswal Private Equity (PE), on May 3 announced that it has preferred to pick a minority stake in Fincare Small Finance Bank via a secondary acquisition worth around Rs 185 crore (USD 25 million).
This investment was made through India Business Excellence Fund-III, a fund managed and advised by Motilal PE.
ICICI Securities, Axis Capital, IIFL Securities, SBI Capital Markets and Ambit Private Limited are appointed as merchant bankers that advise SFB on the IPO. The equity shares of the bank will be listed on BSE and NSE.
Fincare SFB is a Bengaluru-based microfinance institution-non-banking financial company that had turned into a Small Finance Bank. It was one of those 10 applicants out of the total of 72 that the Reserve Bank of India (RBI) had approved for conversion into a SFB followed by the guidelines for this new class of banks issued by the apex bank in 2015.
The lender started its banking operation in July 2-17, but before turning into a SME, it operated its business from two entities, Disha Microfin, a west India based lender and Future Financial Services based in south India, under a broadscale management team.