Bandhan Bank on Monday said it plans to sell up to 11.9 crore shares through an initial public offering (IPO), and has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India. It said in its DRHP that as per the terms of the RBI New Bank Licensing Guidelines, the equity shares of the bank are required to be listed on the stock exchanges within three years from the date of commencement of business of the bank. For Bandhan Bank, the cut-off date is August 22, 2018. Chandra Shekhar Ghosh, MD & CEO, Bandhan Bank, told FE that the timing of the IPO will depend on when the regulator (Sebi) gives its clearance and also on the market conditions. “Taking all these into consideration, we shall decide on the timing of the launch. We will hit the market as early as possible,” Ghosh said. Bandhan Bank reported a net profit of Rs 1,111.9 crore in FY2017 and a net profit of Rs 657.6 crore for the six months ended September 2017. Its gross non-performing assets (NPAs) stood at 0.5% and its net NPA at 0.4% in FY17. Bandhan Bank’s net worth was Rs 4,446.45 crore on March 31, 2017 and it had a capital adequacy ratio of 26.4% on the date.

The bank said in a statement that it will offer “up to 119,280,494 equity shares of face value of ?10 each for cash at a price per equity share (including a share premium per equity share) to be determined through a book building process”. The IPO will comprise a fresh issue of up to 97,663,910 equity shares and an offer for sale of up to 14,050,780 equity shares by International Finance Corporation (IFC), and up to 7,565,804 equity shares by IFC FIG Investment Company I. “The equity holding of IFC group after the issue will decline to 1.8% from about 5%,” said Ghosh. “The objects of the fresh issue are to augment our bank’s tier-I capital base to meet our bank’s future capital requirements,” the bank said in its DRHP.

The book running lead managers to the issue are Kotak Mahindra Capital Company, Axis Capital, Goldman Sachs (India) Securities, JM Financial Institutional Securities and JP Morgan India. The bank said at least one-third of the anchor investor portion shall be reserved for domestic mutual funds. It added that in the event of under-subscription, or non-allocation in the anchor investor portion, the balance equity shares shall be added to the qualified institutional buyer portion. In April 2014, RBI had granted in-principle approval to Bandhan Financial Services and IDFC to set up banks after being recommended as suitable for grant of in-principle approval by the High-level Advisory Committee set up by the RBI.

Once a microfinance company, Bandhan said it has the largest overall gross micro-banking asset portfolio, with Rs 21,380 crore as of March 2017, (also counting gross advances, which includes IBPC/Assignment, in the microfinance segment). “Amongst the banks (private as well as public), the outstanding loans given by Bandhan Bank is more than three times higher than its closest competitor, the State Bank of India (SBI),” it said. The lender began its operations with 501 branches servicing approximately 70 lakh customers located in 24 states across India on August 23, 2015, and expanded to 864 branches servicing approximately 1.1 crore customers located in 33 states on September 30, 2017.