IPO to ‘substantially strengthen’ capital base: Suryoday SFB

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March 13, 2021 2:00 AM

The issue includes a reservation of up to 5 lakh equity shares, (constituting up to 0.47% of the post-issue paid-up equity share capital) for subscription by eligible employees and they may be offered a discount of up to 10% of the issue price.

In the pre-IPO round, the SFB has raised Rs 152 crore from investors, including SBI Life Insurance and Axis Mutual Fund.In the pre-IPO round, the SFB has raised Rs 152 crore from investors, including SBI Life Insurance and Axis Mutual Fund.

Suryoday Small Finance Bank, which is set to hit the capital markets with its initial public offering (IPO) next week, on Friday said the proposed issue will “substantially strengthen” its capital base much more than regulatory requirements.

“It (the IPO proceeds) will substantially strengthen our capital base much more than the regulatory requirement. We will have a substantially strong capital base which will enable us to grow in microfinance and other categories,” said managing director and chief executive officer Baskar Babu Ramachandran.

According to the RBI’s guidelines, if a small finance bank (SFB) reaches the net worth of Rs 500 crore, listing will be mandatory within three years of reaching that net worth. At the end of the last fiscal, Suryoday’s net worth stood at Rs 1,066.23 crore.

Ramachandran was addressing a press conference in connection with the proposed IPO. The issue opens on March 17 and the price band has been fixed at Rs 303-305. The SFB is looking to raise about Rs 580 crore at the upper end of the price band.

The issue includes a reservation of up to 5 lakh equity shares, (constituting up to 0.47% of the post-issue paid-up equity share capital) for subscription by eligible employees and they may be offered a discount of up to 10% of the issue price.

The bank proposes to utilise the net proceeds from the fresh issue towards augmenting its tier–1 capital base to meet future capital requirements. As of December 31, 2020, Suryoday’s capital adequacy ratio was 41.17%, against the stipulated regulatory requirement of 15%.

In the pre-IPO round, the SFB has raised Rs 152 crore from investors, including SBI Life Insurance and Axis Mutual Fund. According to the red herring prospectus, the promoters in aggregate hold 29,734,732 equity shares, representing 30.35% of the issued, subscribed and paid-up equity share capital of the lender.

Axis Capital, ICICI Securities, IIFL Securities and SBI Capital Markets are the book running lead managers to the proposed issue, which will close on March 19.

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