1.04 cr shares issued at negligible premium to face value
THRISSUR: Even as K Paul Thomas had to step down as MD and CEO of ESAF Small Finance Bank on June 2 owing to his small shareholding in ESAF Microfinance, the year 2017-18 had seen him boost his shareholding in ESAF Bank from 6.90 per cent to close to 10 per cent.
In the process, the shareholding of ESAF Microfinance, the largest promoter shareholder of ESAF Bank, by far, has dropped from 93.10 per cent to about 90 per cent.
The bank had issued more than one crore shares during the year to Paul Thomas at almost the face value – with a negligible premium of just 20 paise per share, thus adding Rs10.608 crore to the share capital of the bank.
Meanwhile, Paul Thomas has been reinstated as MD and CEO of ESAF Bank as on October 1, after having sold off his small stake in the holding company – ESAF Microfinance Pvt Ltd – which was in violation of extant regulations.
The year 2017-18 also saw the capital base of the bank getting boosted to the extent of a further Rs133 crore through the issue of Tier 1 and Tier 2 bonds.
While the bank issued Rs45 crore Tier 2 bonds to Esaf Swasraya Multi State Agro Cooperative society, Federal Bank bought Tier 2 bonds worth Rs40 crore from the bank through private placement, both at coupon rates ranging between 10.5 per cent and 11.5 per cent.
Over and above, Esaf Swasraya Multi state Agro Cooperative society also subscribed to Tier 1 bonds (perpetual debentures in the form of non-convertible debentures) at a coupon rate of 13 per cent during this period.
ESAF Bank with a networth of Rs343.35 crore has a paid up capital of Rs311.95 crore and sits on a capital adequacy ratio (CAR) of 16.92 per cent against a minimum required CAR of 15 per cent.
The small finance bank, which has plans to open 450 banking outlets and 350 ATMs in next three years has built up an asset base of Rs4724.13 crore (as of March 31, 2018) during this short period.
The interesting aspect of its aggressive lending is that while most banks, barring maybe Federal Bank, struggle to achieve a credit-deposit (CD) ratio of 70 per cent, ESAF Bank that has an advance book of Rs3155.09 crore enjoys a CD ratio as high as 125 per cent as its deposits are pegged at only Rs2523.09 crore.
The bank has reportedly moved ahead to raise Rs300 crore to Rs350 crore through the sale of shares to boost its capital base and according to reports, ICICI Securities has already been appointed as the investment banker for the purpose.
The move will help the bank to comply with the Reserve Bank of India (RBI) guidelines requiring the promoters to reduce their holding to 40 per cent in the bank within five years of operations.
The bank that has generated an interest income Rs596.84 crore against RS29.39 crore in the previous year reported a net profit of Rs27 crore for the period under review, whereas the total income was at Rs698.70 crore.