Can ESAF IPO meet Oct 20 deadline? Joyalukkas awaits Sebi nod….
By CL Jose
KOCHI/September 30-2022: The one-year-long approval validity for the Popular Vehicles & Services Ltd IPO has lapsed on September 29.
Informed sources said the company is planning to refile a fresh draft red herring prospectus (DRHP) with Sebi before long.
Now the question being asked by the market observers is whether ESAF Small Finance Bank, another public issue aspirant, will be able to meet its ‘issue’ deadline that falls on October 20, which is around the corner.
Another Kerala-based company in the IPO queue is Joyalukkas, the leading jewellery with pan-India presence.
The Thrissur-headquartered jeweller is awaiting the Sebi approval after having submitted the DRHP with the market regulator sometime in March last year.
‘Popular Vehicles’ that has roped in Axis Securities, Centrum Securities and Dam Capital Advisors as its issue managers was planning to raise Rs150 crore by selling fresh shares through a public offering, and has been chasing a ‘right timing’ to float the issue.
The IPO was also to accommodate an offer for sale (OFS) by its private equity partner, Banyantree Finance that holds 34 per cent stake in Popular Vehicles & Finance, which owes its glorious lineage to the reputed Kuttukaran group that once ruled the state’s auto spare parts business.
Talking to businessbenchmark.news, sources close to Popular said it’s likley that company deliberately let the deadline lapse as the issue managers were too cautious about the success of the issue given the weak market conditions, though technically, the decade is said to be that of auto industry’s.
Will ESAF make it?
ESAF, one of the fastest growing small finance banks in the country, is in a tight spot for two reasons and a pull-off from the issue is bound to dent its reputation.
For one, this is the second try by the SF bank to enter the IPO market with the first application having been withdrawn by the bank after reaching very close to the issue date, sometime in March 2021, in order to ‘create space’ for a preferential allotment of equity shares, which did raise Rs162 crore in April 2021.
A total of Rs2.18 crore shares were allotted preferentially to certain high net worth individual (HNI) investors, including some existing investors at Rs75 per share, leading to a dilution of around 5 per cent.
And more seriously, ESAF Small Finance Bank was obliged to list its shares in July 2021 itself as per a condition that requires all small finance banks to list their shares on a stock market within three years since they achieve a net worth of Rs500 crore, which ESAF had crossed in July 2018 itself.
It’s believed that several other small finance banks have also failed to honour this ‘listing’ condition.
In fact, the small finance banks’ association (not by this name per se, I guess) had approached RBI for a relaxation to this stipulation, which most had believed would be allowed by the central bank.
No RBI relaxation
It’s not sure, whether this hope has prompted ESAF to go easy on the IPO ground work. Now that ESAF has a few processes to be completed on a war footing in order for it to catch up the October 20 deadline.
The bank needs to submit the updated DRHP with SEBI, which in all probability will approve the papers within four or five working days.
Once this is done, the applicant can file the red herring prospectus (RHP) with the Registrar of companies (RoC) whose approval could be available, maybe, in the very next day itself.
This will be followed by taking out advertisements in newspapers for two days announcing the price band to be followed for the book building process.
The total issue size of the ESAF IPO stands at around Rs976.24 crore, of which Rs800 crore is likely to come from a fresh issue of shares by the bank.
The anchor investor steps in next, and the anchor investor book will remain open for one day, which will be followed by the IPO process, and this remains open for three days.
But is ESAF really keen to do the IPO this time?
“We are trying our level best to catch up with the deadline,” is what a top official told BBN.
