Federal Bank arm Fedbank Financial refiles draft papers with SEBI for IPO

The IPO comprises a fresh issue of Rs 750 crore and an offer for sale (OFS) aggregating up to 7.03 crore equity shares by the promoter and other selling shareholders.

Under the OFS, 1.64 crore equity shares will be offloaded by Federal Bank and 5.38 crore shares by True North Fund VI LLP.

Fedbank Financial is one of the five private bank-promoted NBFCs in India. It focuses on catering to the MSMEs and emerging self-employed individuals sector.

The company proposes to utilise the net proceeds from the fresh issue towards augmenting Tier–I capital base to meet its future capital requirements, arising out of the growth of business and assets. A part of the proceeds will also be used for meeting offer expenses.

The company and the selling shareholders may, in consultation with the book-running lead managers, consider a private placement of specified securities, or through such other route, of up to 20% of the fresh issue for cash consideration aggregating up to Rs 150 crore prior to a filing of the draft papers.

If such pre-IPO placement is undertaken, the size of the offer will be reduced.

Fedbank Financial is the fastest-growing gold loan NBFC in India among its peers. It has the second lowest cost of borrowing among the MSMEs, gold loan, and MSME and gold loan peer set in India in FY23.

As of March 2023, the company boasts of the third fastest AUM growth among NBFCs in India with a three-year CAGR of 33% between FY20-23. Nearly 86% of the total loan assets are secured against tangible assets, namely gold or a customer’s property.

Housing finance and gold loans cover 46% and 12% of the retail loans industry, respectively, in India in FY23. Crisil MI&A estimates the outstanding value of loans given out by organised financiers – banks and NBFCs – to be Rs 6.1 trillion, with NBFCs accounting for one-quarter of the market.

For the year ending March 2023, revenue from operations stood at Rs 1,178.8 crore, while net profit was at Rs 1,801 crore in the same period.

ICICI Securities, BNP Paribas, Equirus Capital, and JM Financial are acting as the book-running lead managers to the issue.