Kolkata-based Bandhan Bank is set to open its share sale on Thursday and become the newest listed lender in India, giving investors the option to own a bank with presence in the under-served eastern rural market of the country.
The bank will kick off a sale to raise close to Rs 4,500 crore, said people familiar with the issue. The sale will be a combination of up to 9.76 crore fresh equity shares and an offer for sale of up to 1.40 crore shares by World Bank controlled International Finance Corp (IFC) and up to 75.65 lakh shares by IFC FIG Investment Co.
Bandhan Bank is majority controlled by its holding company Bandhan Financial Holdings Ltd (BFHL) which owns 89.76 per cent of the stake. IFC and IFC FIG together hold 4.94 per cent stake while Caladium Investment an affiliate of Singapore’s sovereign wealth fun GIC owns 4.99 per cent stake.
The IPO will ensure that BFHL’s stake falls to 40 per cent . RBI timeline also stipulates that the holding company’s shareholding is cut further to 20 per cent and 15 per cent within 10 years and 12 years, respectively.
“This share sale was necessitated because according to RBI rules the bank has to be listed publicly within three years of starting operations. Their capital adequacy is currently around 17 per cent so capital is not needed. With this capital their capital adequacy will easily go above 20 per cent ,” said a person aware of the deal.
Bandhan Bank along with IDFC Bank received the final nod to start banking operations by RBI in 2015. One of the conditions of the license was public listing within three year which the bank will fulfil now. It started operations on August 23, 2015 and converted its microfinance business into a bank. As of September 2017 it had 864 branches in 33 states across the country.
The bank reported a 18.2 per cent rise in net profit at Rs 331 crore for the September 2017 quarter despite a 84 basis points fall in net interest margin (NIM) as interest rate on its main micro finance loans fell to 18.4 per cent , or about 150 bps lower than last year's 19.9 per cent . One basis point is 0.01 percentage point. The bank’s gross non-performing assets ratio increased to 1.26 per cent in the September quarter from 0.82 per cent in the preceding quarter as loan waiver schemes offered by several state government hampered credit discipline.
This IPO will be the first since Kolhapur based RBL Bank listed on the bourses in August 2016. Axis Capital, Kotak Mahindra, JM Financial, JP Morgan and Goldman Sachs are the bankers to the issue.