ESAF Small Finance Bank kicks off listing process

Trichur may soon have four listed banks headquartered in a radius of 3 kmts

TRICHUR: ESAF Small Finance Bank, the first and the only bank to have received a small finance bank licence in Kerala, has kicked off the ‘listing’ process recently, according to informed sources.

The Reserve Bank of India (RBI) has mandated the small finance banks to get their shares listed on one or more stock markets in the country within three years of the bank attaining a networth of Rs500 crore.

ESAF SFB, which received its licence from RBI on November 18, 2016 and commenced operations on March 10, 2017 has grown its total equity or networth to Rs893.70 crore – well above the Rs500 crore threshold, as of March 31, 2019 compared with Rs343.35 crore a year ago – a growth of 160 per cent. is yet to receive a response to a query sent to the bank seeking more details on the listing exercises, especially on the timeframe for the same.

It is also not yet known whether the bank will go for an IPO or an offer for sale (OFS) or both as a run-up to the listing. It is widely believed that ESAF SFB is likely to launch a small IPO as well as a simultaneous offer for sale (OFS) prior to the listing, as the founding shareholders will anyway have to dilute their holding going forward.

If the listing of ESAF SFB becomes a reality, Trichur, the cultural and financial capital of Kerala, will literally become a town that houses four listed banks given the fact that CSB Bank, another bank from Trichur, has gone all the way up to filing the draft red herring prospectus (DRHP) for its imminent IPO.

The other two Trichur-headquartered banks – South Indian Bank (SIB) and Dhanlaxmi Bank, are already listed on stock markets.

Until the beginning of the financial year 2018-19 (FY19), while 90 per cent of the equity ownership of the bank was with ESAF Financial Holdings Private Ltd, the remaining stake was held by Paul Thomas, the managing director and CEO of the bank.

But during the course of 2018-19, ESAF raised fresh equity capital of Rs464 crore thereby raising the CRAR to a healthy level of 27.59 per cent against the regulatory requirement of 15 per cent.

The new capital expansion saw the holding of ESAF Financial Holdings Pvt Ltd decline to 65.62 per cent, whereas that of Paul Thomas to 7.29 per cent from the earlier 9.99 per cent.

The new shareholders together currently hold a little over 27 per cent in the bank. While PNB Metlife India Insurance Company Ltd,  ESAF Swasraya Multi State Agro Co-Operative Society Ltd and Yusuffali Musaliam Veettil Abdul Kader now hold 4.99 per cent each in ESAF SFB, Muthoot Finance Ltd and Bajaj Allianz Life Insurance Company Ltd also hold shares above 4 per cent each in the bank.

The bank has fared extremely well for 2018-19 with its net profit soaring by 234.53 per cent to Rs90.28 crore from Rs26.99 crore last year. Return on average asset (RoA) was 1.52 per cent as of March end, 2019.



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