ESAF Small Finance Bank files for Rs 998 cr IPO

Kerala-based ESAF Small Finance Bank on Monday filed its Draft Red Herring Prospectus (DRHP) with markets regulator Securities and Exchange Board of India for an IPO.

As per the DRHP, the aggregate issue size is up to Rs 997.78 crore, comprising of a fresh issue component of up to Rs 800 crore and an Offer for Sale up to Rs 197.78 crore by promoter and other selling shareholders i.e PNB Metlife India Insurance Company, Bajaj Allianz Life Insurance Ltd, PI Ventures LLP, and John Chakola.

The net proceeds from the fresh issue will be used to augment the bank's Tier 1 capital (primarily loans, advances and investment portfolio) to meet future capital requirements.

The company may consider a pre-IPO placement of up to Rs 300 crore, subject to counsel from the lead managers.

As per the CRISIL report, ESAF is one of the leading small finance banks in terms of yield on advances, AUM growth rate, and share of retail deposits. It currently operates across 21 states and two Union Territories with 550 branches, 421 customer service centres (which are operated by its business correspondents), 12 business correspondents, 158 banking agents and 327 ATMs and serves over 4.68 million customers.

As of March 2021, ESAF's gross advances stood at Rs 8,415 crore, compared with Rs 6,606.51 crore a year ago and total deposits were at Rs 8,999.43 crore against Rs 7,028.38 crore.

Additionally, the DRHP states that the bank will continue to focus on its rural and semi-urban franchisees and increase deposits across NRIs and CASA. As on date, it stands to have the highest share of retail deposits as a percentage to the total deposits when compared to the other small finance banks.

Investment Bankers appointed to the issue are Axis Capital Ltd, Edelweiss Financial Services Ltd, ICICI Securities Ltd, and IIFL Securities Ltd.