Micro finance institution and small finance bank licensee Ujjivan Financial Services saw a slow start to its initial public offering (IPO) on Thursday as the issue was subscribed more than 21%. Investors bid for 6.2 million shares of the total 29.6 million shares on offer.
Qualified institutional buyers were less enthusiastic as bids for only 48,090 shares of the 8.5 million shares were received. High net-worth individuals subscribed to 5% of their quota or 0.3 million shares of the 6.3 million shares on offer for them. Retail investors on the other hand have bid for the issue 0.21 times or 5.8 million shares of the 14.7 million shares reserved for them.
The firm aims to raise Rs358 crore through the IPO which is priced between Rs207- Rs210 per share. The issue also includes an offer for sale of 2.49 crore equity shares by existing shareholders.
Ujjivan has already allotted 12.6 million shares to its anchor investors including Birla Sunlife MF, ICICI Prudential MF, Reliance Life Insurance and HDFC Standard Life Insurance raising Rs264 crore on Wednesday.
In an earlier interview with FE, MD and CEO, Samit Ghosh said the company had opted for an IPO to bring down the foreign shareholding in the company. “The main reason for us doing an IPO is to reduce foreign ownership to below 49%. The Reserve Bank of India (RBI) mandates that majority ownership in a small finance bank (SFB) has to be domestic capita, Ghosh said.
Ujjivan plans to convert itself into an SFB in the first quarter of 2017. The offer, if fully subscribed to, will bring down the foreign shareholding from 77% to nearly 45% in line with RBI’s directive. The company reported a net profit of Rs122 crore in the nine months period ending December, 2015. Total revenues were Rs729 crore while total expenses stood at Rs541 crore.
The Bengaluru-based company’s business is primarily based on the joint liability group-lending model for providing collateral free, small ticket size loans to economically active women, individual and micro and small enterprises. The issue which opened on Thursday will close on May 2.