ESAF Small Finance Bank IPO: Retail portion fully booked. Check GMP and other details

The initial public offer (IPO) of ESAF Small Finance Bank is getting a healthy response from investors on the first day of the bidding process, especially in the retail category. The offer closes on November 7.The retail portion of the issue was fully subscribed, while the NII portion was booked 64%. The overall subscription so far stood at 65%.

According to market analysts, the company’s shares are trading with a premium of 22% in the unlisted market.Analysts advised investors to subscribe to the issue given the company’s superlative return ratios in the last few years.

The Rs 463-crore IPO includes a fresh equity issue of Rs 391 crore and an offer for sale (OFS) of Rs 72 crore. Under the OFS, promoter selling shareholder ESAF Financial Holdings will offload a stake worth Rs 49 crore and other selling shareholders PNB MetLife and Bajaj Allianz Life make up for the remaining OFS portion.

The IPO is priced in the range of Rs 57-60. Investors can bid for a minimum of 250 shares and in multiples thereafter.

About 50% of the issue is reserved for qualified institutional buyers, 15% for non-institutional investors, and the rest 35% for retail investors.Proceeds from the fresh issue will be used towards augmenting the Bank’s Tier–I capital base to meet its future capital requirements.

ESAF Small Finance Bank has a focus on unbanked and under-banked customer segments, especially in rural and semi-urban areas. The AUM grew from Rs 8,426 crore to Rs 16,320 crore from FY21-23, registering a CAGR of 39.22%, the highest among peers.

For the three months ended June 2023, the company’s total income rose 34% YoY to Rs 992 crore, while net profit was up 22% to Rs 130 crore. Net interest income for the same period increased 30% to Rs 585 crore.

ICICI Securities, DAM Capital Advisors, and Nuvama Wealth Management are the book-running lead managers and Link Intime India is the registrar to the offer.

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