The simultaneous issue from Equitas Holdings Limited which includes a fresh issue of Rs 720 crs and a secondary offer of approximately Rs 1,455 crs in a price band of Rs 109-110 offers investors an opportunity to trade in the share post listing. The company has been given in principle approval to convert itself into a small finance bank and this IPO is in that connection.
The company has broadly three verticals which include micro-finance, vehicle finance and home loan. 53% of the assets under management are in the microfinance sector where it is one of the top ten players in the country. Almost half of its total business comes from Tamil Nadu which is its home state. The total assets under management are Rs 5,500 crs.
The FII holding is being reduced from 93% pre-IPO to 35% post IPO and FII’s and NRI’s are not permitted to invest in the IPO. Post listing they are allowed to invest in the secondary market and there is a cap of holding 5% or more in one or multiple schemes of the same institution.
The price band is interestingly priced at Rs 109-110 and the shares would be allotted at Rs 110. This is probably the narrowest price band and the reason for the same is amply clear that in a book built issue you have to have a band and the price tick is in multiples of one rupee. The company had to choose between having a price of Rs 110 and refiling, and they chose Rs 110 and one rupee lower, and hence Rs 109-110.
The anchor book was very well received and there were 16 anchor investors comprising of 63 entities who were allotted shares at Rs 110.
Conversion from the current entity to a small fiancé bank will entail costs and considerable amount of effort in terms of band width and resources. The outcome and how the small finance bank shapes up will take a good twelve months to roll out. It therefore makes sense to take the pop that is likely to emerge once the share lists and then wait for things to unfold as the company gets ready for its second innings as a small finance bank.
Enjoy the fun and see things unfold.
SEBI Disclaimer: – I intend to apply in the retail category for one lot.