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Suryodaya Small Finance Bank looks to raise Rs 582 crore through IPO; all you need to know

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Suryodaya Small Finance Bank looks to raise Rs 582 crore through IPO; all you need to know

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The initial public offer consists of 19.09 crore equity shares of the face value of Rs 10 each. The offer is divided into a fresh issue of nearly 8 lakh equity shares and an offer for sale of up to 11 crore shares.

Mumbai-based Suryoday Small Finance Bank is set to launch its Rs 582 crore public offering on March 17, becoming the fourth small finance bank to come out with IPO after AU Small Finance Bank, Equitas Small Finance Bank and Ujjivan Small Finance Bank. Here’s all you need to know about the upcoming offer.

Issue Pricing, Dates
Issue Opens on March 17, 2021, and closes on March 19, 2021. The price band is set at Rs 303 to Rs 305 per equity share. A discount of Rs 30 per Equity Share is being offered to Eligible Employees bidding in the Employee Reservation Portion. The Floor Price is 30.30 times the face value of the Equity Shares and the Cap Price is 30.50 times the face value of the Equity Shares. The minimum bid lot is 49 shares, and bids can be made in multiples of 49 shares thereafter.
Selling Shareholder
Selling Shareholders in OFS include International Finance Corporation, Gaja Capital Fund II, DWM (International) Mauritius, HDFC Holdings, IDFC First Bank, Americorp Ventures, Kotak Mahindra Life Insurance Company, and Gaja Capital India AIF Trust.
Issue Size
The Initial Public Offer comprises up to 19,093,070 equity shares of the face value of Rs 10 each. It includes a fresh issue of  8,150,000 equity shares & Offer for Sale (OFS) of up to 10,943,070 equity shares. At the lower end of the price band, the bank will raise approximately Rs 577 crores and at the upper end, Rs 581 crores. The bank would have a post Issue implied market cap of Rs 3,216 - 3,237 crores
Pre-IPO Placement
Suryodaya SFB raised a little over Rs 150 crore in a pre-IPO placement. The placement of 5,208,226 equity shares at a price of Rs 291.75 per equity share comprised of (i) private placement of 3,084,833 equity shares to SBI Life Insurance aggregating to approximately Rs 90 crores (ii) private placement of 1,713,795 equity shares to Axis Flexi Cap Fund aggregating to approximately Rs 59 crores; (iii) private placement of 342,760 equity shares to Axis Equity Hybrid Fund aggregating to approximately Rs 10 crores; and (iv) private placement of 66,838 equity shares to Kiran Vyapar aggregating to approximately Rs 1.95 crore.
Book Running Lead Managers for IPO
Axis Capital, ICICI Securities, IIFL Securities, and SBI Capital Markets.
Financial of the Company
The bank’s Gross Loan Portfolio has grown at a CAGR of 46.98 percent from Rs 1,717.78 crore as of March 31, 2018 to Rs 3,710.84 crore as of March 31, 2020 and was Rs 3,908.23 crore as of December 31, 2020. On the liability side, their products comprise current accounts, savings accounts, salary savings accounts and a variety of deposit accounts including recurring deposits and fixed deposits that they source from customers across India. Their deposits have grown at a CAGR of 94.95 percent from Rs 749.52 crore as of March 31, 2018 to Rs 2,848.72 crore as of March 31, 2020 and was Rs 3,343.84 crore as of December 31, 2020. The bank posted a profit after tax of Rs 54.86 crore for the quarter ending December 31, 2020.
The Bank’s proforma gross NPA ratio as of December 31, 2020 was 9.28 percent (versus 0.78 percent reported gross NPA), and net NPAs at 5.38 percent, on a proforma basis ( versus reported net NPA of 0.33 percent).
About Suryodaya Small Finance Bank
It commenced operations as a microfinance institution in 2009, and following conversion to a SFB, diversified into other products like commercial vehicle loans, affordable home loans, micro business loans, secured and unsecured business loans to MSME/SME and corporates and financial intermediary group loans.
Microfinance loans constitute a significant portion of Gross Loan Portfolio, at 70.35 percent as of December 31, 2020. Commercial vehicle loans represented 9.42 percent, affordable housing loans 6.30 percent, micro business loans 0.99 percent, unsecured MSME/SME loans 1.02 percent,  secured business loans 3.63 percent,  financial intermediary group loans 4.78 percent, and other loans represented 3.51 percent of Gross Loan Portfolio. It currently has 554 Banking Outlets across 13 states and union territories.
COMPARISON WITH LISTED INDUSTRY PEERS (AS ON 31ST MARCH 2020)
 
Name of the Bank Total Income (₹ in Cr)​  Face ValueEPS (Basic)  NAV  P/E  RoNW (%) 
Suryoday Small Finance Bank Ltd854.141013.41123.13na10.43%
Ujjivan Small Finance Bank Ltd3,025.81102.1918.3216.1614.79%
CreditAccess Grameen Ltd1,705.481023.20189.9031.1112.27%
Spandana Sphoorty Financial Ltd1,469.511056.21408.2912.1413.40%
Bandhan Bank Ltd12,434.691018.7894.3717.9741.08%
AU Small Finance Bank Ltd4,991.981022.78142.2048.3451.95
Source: Axis Capital
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