ESAF Small Finance Bank IPO: A Closer Look

Honey Gupta
4 Min Read

ESAF Small Finance Bank’s Initial Public Offering (IPO) opened for subscription on November 3, 2023, and will remain open until November 7, 2023. The IPO is priced between ₹57 and ₹60 per equity share with a face value of ₹10. In this article, we will provide a comprehensive overview of the IPO, including subscription details, share allocation, and expert opinions.

Key IPO DetailsThe company plans to utilize the net proceeds from the fresh issue to strengthen its Tier–I capital base to meet future capital requirements.
Anchor InvestmentOn November 2, ESAF Small Finance Bank IPO raised ₹135.15 crores from anchor investors, allocating 2,25,24,998 equity shares at ₹60 per share.
IPO ComponentsThe IPO includes a fresh issuance of equity shares worth ₹390.7 crore by the company and an offer-for-sale (OFS) of equity shares worth ₹72.3 crore by three shareholders. The company aims to raise ₹463 crore from the IPO.
Shareholders in OFS– Promoter ESAF Financial Holdings – ₹49.26 crore – PNB MetLife India Insurance Company – ₹23.04 crore – Bajaj Allianz Life Insurance Company – ₹23.04 crore
Use of ProceedsThe company plans to utilize the net proceeds from the fresh issue to strengthen its Tier – I capital base to meet future capital requirements.
Lead Managers and Registrar– Lead Managers: ICICI Securities, DAM Capital Advisors, Nuvama Wealth Management – IPO Registrar: Link Intime India
Subscription StatusOn the first day, ESAF Small Finance Bank IPO was subscribed 1.74 times. Key subscription figures: – Retail Investors: 1.98 times – NII: 2.44 times – QIB: 90% – Employee: 1.01 times
Tentative Listing DateESAF Small Finance Bank is scheduled to be listed on Thursday, November 16. The IPO allotment date is set for Friday, November 10.

Grey Market Premium: The grey market premium (GMP) for ESAF Small Finance Bank IPO is +22, which is consistent with the previous session. This indicates that shares are trading at a premium of ₹22 in the grey market. Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price is ₹82 per share, representing a 36.67% increase from the IPO price of ₹60.

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Expert Opinions: Two prominent brokerages, BP Equities Pvt Ltd and LKP Securities Ltd, have shared their perspectives on the ESAF Small Finance Bank IPO:

  • BP Equities Pvt Ltd: The brokerage highlighted that ESAF Small Finance Bank’s capital adequacy ratio was 20.6% as of June 30, 2023, the best asset quality among comparable peers. They recommend subscribing from a medium to long-term perspective, considering the attractive valuation and the company’s plans to enhance its capital base.
  • LKP Securities Ltd: With the stock valued at 1.46 times the price-to-book value per share, LKP Securities believes that ESAF Small Finance Bank Limited is worth subscribing to, given its strong return ratios and financial performance.

Conclusion: ESAF Small Finance Bank’s IPO has generated considerable interest from investors and experts. With a successful anchor investment round and a strong start in subscriptions, the IPO shows promise. The company’s plans to strengthen its capital base and the positive outlook from brokerages make it an attractive investment opportunity. Investors are advised to consider their investment horizon and risk tolerance when making their decisions.

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