Tag: Suryoday Small Finance Bank ipo

All you need to know about Suryoday SFB IPO, BFSI News, ET BFSI

Personal Finance

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The Suryoday Small Finance Bank IPO is now open and live till March 19, with a price band of ₹303-305. Each lot consists of 49 shares. A total of 1.9 crore shares are available for subscription in the IPO. 50% of the issue is reserved for qualified institutional buyers (QIB), 15% for non-institutional bidders and the remaining 35% for retail investors. Employees of the bank will have 5 lakh shares reserved for them, issued at a discount of Rs 30 per share.

The bank is among the leading SFBs in India in terms of Net Interest Margins, Return on Assets, Yields and deposit growth and had the lowest Cost-to-Income ratio among SFBs in India in Fiscal 2020.

Suryoday SFB‘s purpose against launching its IPO
The proceeds of the IPO are proposed to be used for boosting the bank’s Tier-1 capital base to meet future capital requirements. Tier-1 capital refers to the core capital of a bank that consists of equity shares and retained earnings.

According to the bank’s red herring prospectus, the fund-raising will help Suryoday Small Finance Bank to augment its capital base. As of December 31, the bank’s capital adequacy ratio stood at 41.17%, where Tier-1 capital constituted 34.3% reported by The Quint.

Further, small finance banks are required to list within three years of reaching a net worth of Rs 500 crore, as per the 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 timeline for listing till May 31, 2021. However, the RBI rejected the request and asked it to complete its listing at the earliest, according to the prospectus.

Business of Suryoday Small Finance Bank
SSFB received the small finance bank licence from the RBI in 2016. Prior to that SSFB operated as a NBFC and offered small ticket-size loans to women from weaker sections of the society. SSFB serves customers in the unbanked and underbanked categories. It has been serving these segments for over a decade now

SSFB currently provides a wide range of products and services, including housing loans, commercial vehicle loans, micro business loans, unsecured micro and small enterprise loans, among others.

As of December 31, 2020, SSFB’s customer base was 1.44 million and its employee base comprised 4,770 employees and it operated 554 Banking Outlets including 153 Unbanked Rural Centres.



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Suryoday SFB raises Rs 150 crore before IPO, BFSI News, ET BFSI

Banking & Finance

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KOLKATA: Suryoday Small Finance Bank has raised Rs 150 crore from SBI Life Insurance Company and Axis Asset Management Company in a pre-IPO placement, valuing the bank at Rs 2,700 crore.

The pre-IPO placement was made at Rs 291.75 a share ahead of its likely initial public share sale that seeks to garner Rs 550-600 crore. The public issue is likely later this month.

The bank may attract 5-10% premium over the pre IPO price, people involved in the process said. Pre-IPO purchases of shares cannot be offloaded for a year.

A pre-IPO placement is a sale of a large chunk of shares ahead of an IPO. Normally, the price of equity shares at the time of public offer comes at a premium over the pre-IPO price.

It is learnt that SBI Life has invested Rs 90 crore while Axis Asset Management Co has put in Rs 60 crore.

Suryoday declined to comment, while SBI Life and Axis AMC did not respond to mails.

Suryoday would be the fourth small finance bank to come out with IPO after AU Small Finance Bank, Equitas Small Finance Bank and Ujjivan Small Finance Bank. Unlike Equitas and Ujjivan, Suryoday has no holding company.

ESAF Small Finance Bank is also preparing for its public offer, which is likely to be in next fiscal, while Utkarsh Small Finance Bank has recently sought market regulator Securities & Exchange Board of India’s approval for public share sale. Reserve Bank of India has mandated small finance banks to get listed within three years of reaching a net worth of Rs 500 crore.

The non-operating holding companies of both Equitas and Ujjivan are also listed.

The market capitalization of Equitas Holdings is Rs 3,093 crore at the end of Tuesday’s trade, while that of Equitas Small Finance Bank is Rs 6,618 crore. Market cap of Ujjivan Financial Services is Rs 2,957 crore while that for the Ujjivan Small Finance Bank is Rs 5,919 crore.

Equitas Small Finance Bank had its loan portfolio at Rs 17,373 crore at the end of December 2020, while Ujjivan Small Finance Bank had it at Rs 13,638 crore.

Suryoday’s gross loan portfolio was Rs 3,711 crore at the end of March 2020 with 76% of it constituting microloans to women borrowers. The bank also has commercial vehicle loans, affordable housing loans and loans to small and medium enterprises in its bouquet of products. It’s net interest margin for FY20 was 11.92%. Suryoday’s loan portfolio grew to around Rs 3,900 crore at the end of December.

The bank’s average collection efficiency, a measure of future asset quality, was at 82% for the month of December while it was lower in three key states — Maharashtra, Tamil Nadu and Odisha. These three states together account for 77% of its lending businesses.

The bank’s IPO includes fresh issue of up to 11.59 million equity shares and an offer for sale of up to 8.4 million equity shares. Existing investors such as International Finance Corporation, Gaja Capital, DWM (International) Mauritius, IDFC First Bank, Kotak Mahindra Life Insurance and Polaris Banyan Holding will be paring their stakes through the offer for sale, according to the draft red herring prospectus.



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