1. Bandhan Bank’s IPO launch timing to depend on “market conditions”, says founder

Bandhan Bank’s IPO launch timing to depend on “market conditions”, says founder

Bandhan Bank, which has set the ball rolling for the initial public offer (IPO) of shares, says timing of its launch will depend on the "market conditions". The private sector lender has completed two years as a universal bank.

By: | Updated: August 24, 2017 10:53 AM
I will not defer the launch of IPO, but the timing of its launch will depend on the market conditions,” Chandra Shekhar Ghosh, managing director, and chief executive officer, told reporters. (Express Photo)

Bandhan Bank, which has set the ball rolling for the initial public offer (IPO) of shares, says timing of its launch will depend on the “market conditions”. The private sector lender has completed two years as a universal bank. As per the Reserve Bank of India’s guidelines, it has to go for an IPO in next year. “We will have to do it within three years of starting the banking operations to comply with the RBI guidelines. I will not defer the launch of IPO, but the timing of its launch will depend on the market conditions,” Chandra Shekhar Ghosh, managing director and chief executive officer, Bandhan Bank, told reporters.

Ghosh, the founder of Bandhan, was speaking on the sidelines of the bank’s event on Wednesday evening, organised to celebrated its second foundation day.

The bank has already started the process of selecting investment banks, which will work on the planned IPO and share listing on stock exchanges. “The process of selecting investment banks has started. The hired investment banks will analyse market conditions, following which our board will decide on the IPO launch timing. But it is not going to be floated within this calendar year,” he told FE.

“There is no hard and fast rule really that our initial public offer will have to hit the capital market by August next year,” he pointed out, adding it would be difficult to say that exactly when the IPO would be floated. Also, the bank had not yet decided on the total issue size.

Bandhan Bank, which was the first instance in the country of a microfinance entity transforming into a universal bank, commenced its operations on August 23, 2015 with 501 branches across 24 states. Both GIC, Singapore’s sovereign wealth fund, and International Finance Corporation (IFC), a member of the World Bank Group, hold nearly 5% stake in the bank. Representatives from IFC and GIC have joined the bank’s board.

Last year, Ghosh had said he would prefer more lenient terms for the timing of the listing on stock exchanges for his bank as according to the on-tap universal banking licences guidelines, new banks would have to be listed within six years of the commencing business.

“I would like to postpone the IPO, if RBI permits. We have not yet approached the central bank for the postponement. But we may approach for the necessary permission, if required,” Ghosh told had told FE. On Wednesday, while speaking with the reporters, he said, “We have not spoken to RBI for more time. We have not applied for providing us additional time.”

Currently, the bank has 840 branches and 383 ATMs, with 11 million customers. Around 70% of its branches are in rural areas. It has mobilized deposits worth Rs. 23,500 crore, while loan book stands at Rs. 20, 800 crore. The lender has two divisions — general banking and micro banking, offering a suite of retail financial solutions, including a variety of savings and loan products.

Ghosh informed that the bank has started loans against gold in as many as 25 urban branches. The lender would like to expand gold loan portfolio as responses were good. “We started gold loan facilities for our customers five months ago…going forward more urban branches will offer this product. We are seeing handsome growth in gold loans. The bank would like to grow this business in certain pockets of urban areas,” he said.

Currently, micro-lending constitutes around 90% of the bank’s total loan portfolio. Bandhan, however, is eyeing a change in the business mix after a few years. “We expect in the next 3-5 years non-micro loans will be around 25% of our total loan book,” Ghosh added.

The Bank last month reported a net profit growth of over 35% year-on-year to Rs. 327 crore for the first quarter ended June 30 from Rs. 242 crore for the corresponding period a year ago. During the quarter, its operating profit grew 44.68% y-o-y at Rs. 557 crore as against Rs. 385 crore in the year-ago period.

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