Fincare Small Finance Bank gets SEBI's go-ahead to raise Rs 1,330 Cr via IPO

Digital lender Fincare Small Finance Bank has received capital markets regulator SEBI's go-ahead to raise Rs 1,330 crore through an initial share sale.

The initial public offer (IPO) comprises a fresh issue of equity share of the bank worth Rs 330 crore and an offer for sale aggregating up to Rs 1,000 crore by promoter Fincare Business Services Limited, according to the Draft Red Herring Prospectus (DRHP).

This offer includes a reservation for subscriptions by employees.

Fincare Small Finance Bank, which filed IPO papers with capital market regulator in May, obtained its "observations" on July 28, an update with Securities and Exchange Board of India (SEBI) showed on Monday.

SEBI's observations are very necessary for any company to launch public issues like IPO, follow-on public offer, and rights issue.

Going by the draft papers, the bank would utilise net proceeds from the fresh issue towards augmenting its Tier-I capital base to meet future capital requirements.

Further, a small portion of the proceeds will be used towards meeting the expenses in relation to the offer.

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Under the terms of the RBI final approval and the small finance bank (SFB) licensing guidelines, the lender is required to list its equity shares on the stock exchanges within a period of three years from reaching a net worth of Rs 500 crore.

The Bengaluru-based MFI-turned small finance bank started operations in July 2017. Before converting into a small finance bank, Fincare SFB largely conducted business from two entities — Disha Microfin focused on the western region and the south-focused Future Financial Services.

In May, Motilal Oswal Private Equity (PE) announced that it picked up a minority stake in Fincare Small Finance Bank through a secondary acquisition worth around Rs 185 crore ($25 million). The investment was through India Business Excellence Fund-III, a fund managed and advised by Motilal PE.

ICICI Securities, Axis Capital, IIFL Securities, SBI Capital Markets, and Ambit Private Limited are the merchant bankers to the issue. The equity shares of the lender will be listed on BSE and NSE.