Fincare Small Finance Bank, a Bengaluru-based micro-financing firm, has filed its Draft Red Herring Prospectus or DRHP with the Securities and Exchange Board of India (SEBI) the gone month (May 2021), and as the plan states, the bank is planning to raise Rs 1,330 crore from its IPO launch.
The amount of the IPO also comprises an OFS (Offer for Sale) of up to Rs 1,000 crore, which shall provide a profitable exit for the existing investors of the bank.
Prior to the IPO’s launch, the sentiment has largely been positive, given its projections and reports thus far. The IPO is being managed by some of the biggest names in the market: ICICI Securities, Axis Capital, IIFL Securities, and SBI Capital Markets. Moreover, it has come to notice that Fincare sold a minority stake to Motilal Oswal Private Equity at Rs 185 crore.
Before we get into the details of the IPO, let us take a look at some of the important details investors would need to know beforehand. We have listed down everything that you may need to know regarding:
– Fincare Small Finance Bank IPO
– Fincare Small Finance Bank IPO launch date
– Fincare Small Finance Bank IPO price
– Fincare Small Finance Bank IPO application process
About Fincare Small Finance Bank
Looking at Fincare’s case, one can see the various collaborations that shaped it up to become the company it is today. Although incorporated as a commercial bank just 3 years back, Fincare has over a decade to boast of.
In 2007, Future Financial Services developed a business model catering to women in the Indian state of Andhra Pradesh and specifically dealt in microloans. Two years later, another NBFC- MFI, Disha Microfin, developed its micro-lending facilities to serve the female demographic of Gujarat.
Both the companies were on their individual paths when in 2010, True North Advisors funded them, which led them to expand and eventually merge in 2014. This is when their journeys together as Fincare began as they applied to become the “Fincare Small Finance Bank” the very next year. Fair Innovative Nimble Collaborative Accountable Resolute Excellent (FINCARE), imbibing these core values, the bank continued to grow its products as well as its people across the Southern and the Western part of the country.
In 2017, Fincare received its banking license from RBI, the Reserve Bank of India. Though it has only been 3 years for Fincare, their lending portfolio is a decade old. The company serves over 25 lakh customers today and offers all banking solutions at par with its contemporaries. Their offerings include savings or current accounts, fixed deposits, recurring deposits, cash overdrafts, loans against gold/property, two-wheeler loans, and of course, microloans, the first offering they started with.
The bank’s digital front is key in their growth and could be a reason behind why, among banks of comparable size, they have the highest growth rate up till FY 2020. Between FY 2018 to FY2020, the bank showed a CAGR of 41.05%, with their loan books growing to Rs 5,547.58 crore from Rs 2,154.37 crore just two years back.
Despite the pandemic, Fincare Small Finance Bank emerged as the most profitable SFB (Small Finance Bank), defeating competitors who are well over 2 decades old too, with the best adjusted ROA and ROE for the past financial year.
There are two important factors, which could lead to such hopeful trends in the future too:
– Rural Penetration: Fincare Small Finance Bank has its reach across 16 states and union territories, encompassing well over 180 districts of the nation. However, their focus has always been towards bringing affordable banking solutions to the rural sector, which makes up for nearly 80% of their future strategies. Needless to say, this also means their major share of customers is in rural areas, supplying its banking products to over 37,000 villages.
– Digital Emphasis: #SmartBanking is the motto of this company, and so they have delivered with their easy-to-reach and AI-powered online working model. They have gone so far as to launch WhatsApp chatbots to relieve ailing customers during the recent COVID-19 problem.
Looking at the immediate future in the coming year, Fincare Small Finance Bank plans to raise well over ₹250 Crores in the coming 12-18 months and register 65% more business with its lending model.
Moreover, the bank plans on expanding its base to other cities and setting up a few more hundred branches across the nation to reach a total of 700.
It also plans on bringing the Gross Non-performing Asset or GNPA ratio from 1.3% to 1% in the coming years.
The majority of the stake in the Fincare Small Finance Bank is held by its parent company, Fincare Business Services, at 78.57%, who plan on shedding the share down to 40% over the course of 3-5 years. Other notable promoters include Wagner, True North Fund, Indium IV Holdings, and Omega TC Holdings, who together hold less than 10% of the company’s shares, among others, which is likely to change after the IPO launch.
Fincare Small Finance Bank IPO Launch Date
Since the first draft has been submitted to SEBI, one could expect the listing anywhere around the latter half of the year. Most likely to be launched in the fourth quarter of the financial year, even the Board members haven’t yet fixed a date. With so many plans underway, the CEO of the bank, too, said in a recent interview, they have most of their focus on growing the business.
Rajeev Yadav, who’s the running MD and CEO of the bank, said the evaluation exercise for the IPO is underway with SEBI; however, the Board is in no rush and can wait well till FY 2023-2024 for the listing.
Needless to say, investors won’t be made to wait for so long, and with such commitment and numbers from the promoters, one can only count days till what seems like a blockbuster IPO hits the market.
Fincare Small Finance Bank IPO Expected Share Price
With the proposal being evaluated as we write this article, there is no update on the final price of the IPO issue. However, given the bank’s reliable trends, the IPO is likely to be oversubscribed in the primary market, which shall push its price higher on the launch date.
While the date of the launch is uncertain, and so is the IPO price, we can expect Fincare to be on the charts by the year’s end.
How To apply for Fincare Small Finance Bank IPO with TradeSmart
|USPs of Fincare||Deep Network in Rural Areas|
|Neat operations with budgeted interest rates|
|Paperless Loan Origination|
|Large number of Partners|
|Very Little Ratio of Non-Performing Assets|
Fincare Small Finance Bank looks good on books, and no wonder you are curious to know how to apply for Fincare Small Finance Bank IPO. The best way to apply for Fincare Small Finance Bank IPO would be through your Demat account, which you could link to your TradeSmart account for a customer-optimized experience.
TradeSmart will be your stock market assistant, with useful tips, features, and a data bank to help you gauge the charts in real-time while buying and selling in a couple of seconds. TradeSmart offers an easy interface to stock market enthusiasts to not just apply for an IPO but also to conduct all their stock market-related activities therein.
Following are the steps to apply for the Fincare IPO when it releases:
- Log into the Box and link your preferable UPI app such as Amazon Pay, GPay, Paytm UPI, BHIM UPI, among other available options.
- Click on the menu section and select portfolio, where you will find a section for IPO listings, go to the IPO section. This is where you would be able to see all the present as well as future IPOs, alongside their expected share price. When Fincare Small Finance Bank IPO is near its release, you will find its listing here.
- Click on “Apply,” then click on the “Bid” option.
- You can pick the number of bids, and you would have to place your bid for or above the cut-off price.
- After placing your bid, you have to tick on a policy acknowledgment box to confirm having understood the Prospectus.
- Click on the “Submit” button. You will receive a mandate request on your UPI app within 24 hours, and shall you accept your IPO mandate, the amount of the IPO will get blocked, meaning it wouldn’t get credited to the IPO managing firm; however, your bank would freeze the amount, which gets released a day prior to the stock’s listing. The amount is unblocked and made free to use if you do not get any allocation. In case you get some or all the shares you bid for allocated, the respective amount would be debited in exchange for the number of shares you have been allocated.
On the day of the listing, you could find the shares being shown in the list of shares in your TradeSmart portfolio. However, for now, all that investors can do is wait for this ambitious IPO, and meanwhile, you could explore TradeSmart and check out the other IPOs that are currently nearing their launch.