ESAF’s FY22 financials yet to be posted; Dhanlaxmi Bank gets 3 months breather
By CL Jose
KOCHI/October 12-2022: ESAF Small Finance Bank’s long-awaited initial public offering (IPO) may go to cold storage once again as the deadline for the issue, October 20, is just five days away and no issue-related ‘noise’ is heard at all in the market.
Submitting updated DRHP with Sebi, filing red herring prospectus (RHP) with Registrar of Companies (RoC) followed by taking out two-days’ ads in newspapers, opening subscription for anchor investors, announcing the price band, and finally allowing three-day book-building process – all needs time before the issue can take off, which is now practically ruled out.
Another Kerala-based company, Popular Vehicles & Services Ltd, had missed its IPO deadline two weeks ago, and is said to be planning to refile IPO application once again with SEBI, the market regulator.
The most digestible reason for the postponement of the ESAF IPO though could be unfavourable market conditions, there are more of naysayers in the market, who would love to attribute much serious reasons to it.
Businessbenchmark.news has not been able to officially confirm the real status of the ESAF ‘issue’ as the officials whom this portal contacted remained tight-lipped all along. The issue size is approx Rs997.78 crore which includes a fresh issue of approx. Rs800 crore and an offer for sale (OFS) of approx Rs197.78 crore.
There are unconfirmed reports doing rounds that though the issue now can’t think of catching up with the October 20 deadline, a dedicated team from ESAF SFB, the first small finance bank to be licensed from the state, is working incessantly on getting a relaxation on the timing of the ‘same’ issue.
Delivering on the public offer this time is crucial for ESAF as this is the second time in as many years, the bank has applied for an IPO, the first one having been called off early 2021 just before the issue could take off.
And more seriously, ESAF was mandatorily required to list its shares in July 2021 itself, as part of another regulation, which stipulates all small finance banks to list its shares on a stock market within three years of achieving Rs500 crore net worth.
Where’s FY22 financials?
What is more intriguing is the fact that the bank is yet to post its financials with audit report for the financial year 2021-22 (FY22) despite having passed more than six months since the close of the financial year.
Market is debating whether the yet-to-be-published FY22 financials (full) or auditors’ comments thereon have anything to do with the present confusion on the IPO despite the bank having had a full one year since the management obtained approval for the issue.
There were reports that several small finance banks and NBFCs have burnt their fingers on micro finance loans that are given away without security. ESAF Bank’s lion’s share of loans are microfinance loans, which by definition is mostly unsecured though the pricing of these loans could be even up to 25 per cent,
Dhanlaxmi gets breather to file FY22 financials
Dhanlaxmi Bank has got three months extension from Registrar of Companies (RoC) to file its FY22 financials. The bank was ideally required to file the FY22 financials and hold its AGM by September 30.
The bank, that came out of a four-year-long prompt corrective action (PCA) framework in February 2019, hasn’t been peaceful internally ever since with several issues having battered the bank all along.
The squabbles among the key investors/directors were reported to have affected Dhanlaxmi’s smooth functioning at times. It was in October 2020 the RBI-approved MD & CEO, Sunil Gurbaxani, was voted out by shareholders at the AGM with thundering majority, which is unheard of in Kerala’s corporate history.
Last year, a section of shareholders called for an EGM to discuss the bank’s deteriorating finances, especially the precariously high cost-to-income ratio that has been pressuring the bank’s bottom line.
According to sources, the bank is not able to conclude a Rs200 crore rights issue planned months ago in order to strengthen its capital base.
