Fincare Small Finance Bank refiles IPO draft papers

By Consultants Review Team Tuesday, 09 August 2022

IPOFincare Small Finance Bank has refiled its IPO draft papers with the capital markets regulator Securities and Exchange Board of India.

The IPO consists of a fresh issue of shares worth Rs 625 crore and an offer for sale of up to 17 million shares by shareholders and promoters. The firm had earlier filed draft papers in May 2021 for an IPO with a fresh share issue of Rs 330 crore and OFS of Rs 1,000 crore.

The revised OFS comprises 14.93 million shares by Fincare Business Services, 4.71 lakh shares by Wagner Ltd, 4.44 lakh by True North Fund LLP, 4.31 lakh shares by Indium IV (Mauritius) Holdings Ltd, 2.24 lakh shares by Omega TC Holdings Pte Ltd, 1.31 lakh shares by LeapFrog Rural, 1.26 lakh shares by Kotak Mahindra Life Insurance, and 1.17 lakh shares by Edelweiss Tokio Life Insurance.

Proceeds from the fresh issue of shares will be used for augmenting the bank’s tier one capital base to meet its future capital requirement.

As of March 2022, Fincare's total Capital to Risk (Weighted) Assets Ratio stood at 22.32 percent.

ICICI Securities, Axis Capital, IIFL Securities, SBI Capital Markets and Ambit Pvt Ltd are the lead managers to the issue.

Fincare is a digital-first small finance bank with a focus on unbanked and under-banked customers, especially in rural and semi-urban areas.

Fincare was a Bengaluru-based microfinance institution that turned into a small finance bank. It was one of the 10 applicants out of the total 72 to receive approval for conversion.

Before converting, the microfinance lender was largely conducting business from two entities, Disha Microfin based in west India and Future Financial Services based in south India, under a single management team. It started banking operations in July 2017.

For FY22, the lender reported a 92 percent fall in its net profit to Rs 8.87 crore. Net interest income rose 25 percent to Rs 876 crore. Gross NPAs rose 7.79 percent at FY22 end from 6.42 percent last year while net NPAs stood at 3.55 percent versus 2.8 percent a year ago.

The lender has a deep rural franchise and experience of over 15 years in microfinance. As of March 2022, it covered 48,542 villages, with 2.39 million base-of-pyramid households and 2.35 million rural savings accounts.

It has a pan-India network of 919 banking outlets (including 246 business correspondent outlets) and 125 ATMs of which 90 are cash recyclers, spread across 14 states and three Union Territories covering 255 districts.

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