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Indian markets regulator SEBI has approved the DRHP of Utkarsh Small Finance Bank, thereby allowing the Bank to float its IPO to raise funds to the tune of Rs 500 crores.
Utkarsh SFB began operations in FY 2009-10 as a Micro Finance Institution in Varanasi with a client base of 8,000 and an outstanding portfolio of Rs 6.3 crores. By FY 2014-15, the Bank had expanded its operation across Bihar, Madhya Pradesh, Uttar Pradesh, Uttarakhand, and Maharashtra and grew its outstanding portfolio to Rs 728 crores.
In FY 2015-16, the Bank received RBI's approval to operate as a Small Finance Bank and expanded across Chhattisgarh and Jharkhand while initiating its banking operations in 2017. By 2020, the bank's customer base had grown to 2.5 million, opened 500 banking outlets & had a deposit base of over Rs 5,000 crores.
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However, this is not the first time the SFB has tried going public. Its first attempt was in May 2019, when it tried to raise Rs 1,350 crores from an IPO which was approved in June of that year. However, the company did not float its IPO for a year, which caused the regulator's approval to lapse.
In July 2022, the Bank refiled its DRHP only this time it was planning to raise Rs 500 crores, a 63% reduction. Now, SEBI has approved its papers once again, paving the way for the Bank to float its IPO.
According to the DRHP, the bank's public issue will be a 100% fresh issue of shares with a Face Value of Rs 10 each, the proceeds of which will be utilized to improve the leader's Tier-1 capital base in order to meet its future capital requirements.
75% of the total issue will be reserved for Qualified Institutional Buyers, 15% for Non-Institutional Investors, and the balance 10% for Retail Investors. The company is also said to be in discussions with its bankers to raise Rs 100 crores through a private placement, which if completed, would result in the issue size being reduced.
ICICI Securities and Kotak Mahindra Capital are the book-running lead managers to the issue while KFin Technologies is the registrar of the offer.
Article by Aman Agarwal
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