The issue of shares, which closed on Monday, was made to comply with the Reserve Bank of India’s directive to bring down the foreign shareholding to below 49%.
The initial public offering (IPO) of small finance bank (SFB) licensee Ujjivan Financial Services has met with overwhelming response with the issue subscribed 40.7 times, reports Josephine John in Mumbai. While 2.96 crore shares were on offer, bids were received for 120.5 crore shares.
The issue of shares, which closed on Monday, was made to comply with the Reserve Bank of India’s directive to bring down the foreign shareholding to below 49%. After the issue the foreign shareholding in Ujjivan will come down from 77% to nearly 45%.
Among the anchor investors in Ujjivan are Birla Sunlife MF, ICICI Prudential MF, Reliance Life Insurance and HDFC Standard Life Insurance who between them have invested Rs 264 crore.
Most IPOs in recent months have been well received including those of Thyrocare, Infibeam and Healthcare Global.
Another SFB licensee, Equitas Holdings, which hit the primary market on April 5, saw the issue subscribed nearly 17 times. The stock had a stunning debut, gaining 33% on listing day.
Ujjivan’s IPO saw interest across all shareholder categories, qualified institutional buyers (QIB), high net-worth individuals and retail investors, who bid for close to 5.2 crore shares of the 1.47 crore shares reserved for them.
The microfinance institution(MFI) had planned to raise Rs 358 crore though the IPO, which was priced between Rs 207 and Rs 210 per share. The issue had also included an offer for sale of Rs 2.49 crore equity shares. The MFI reported a net profit of Rs 122 crore in the nine months ended December 2015. Total revenues were Rs 729 crore while total expenses stood at Rs 541 crore. Ujjivan plans to convert itself into an SFB in the first quarter of 2017.
Domestic brokerage Reliance Securities noted that post the fresh issue, the company will be trading at a trailing valuation of 1.6x P/ABV which looks reasonable considering its strong growth potential. However, Ujjivan may witness a fall in its RoA and RoE in the medium term due to transition into SFB, the brokerage said.