March 10, 2022 02:57 PM
Federal Bank subsidiary Fedbank Financial Services Limited (FedFina) has filed the draft red herring prospectus (DRHP) for its initial public offering (IPO) with markets regulator Securities and Exchange Board of India (SEBI).
The IPO includes a fresh issue aggregating up to Rs 900 crore and an offer for sale (OFS) of up to 45,714,286 equity shares by the company’s promoter and investor, according to the DRHP.
The OFS consists of up to 16,497,973 equity shares by Federal Bank and up to 29,216,313 equity shares by True North Fund VI LLP, the company said in a regulatory filing.
Federal Bank will continue to own over 51 per cent of the outstanding share capital after the conclusion of its offering.
The company proposes to utilise the net proceeds from the fresh issue towards augmenting its Tier – I capital base to meet its future capital requirements arising out of the growth of business and assets.
FedFina is a retail-focused NBFC and operates a “twin-engine” business model, with two complementary products — gold loans and instalment loans to MSMEs and emerging self-employed individuals.
The company believes that its long operating history, track record, management expertise and the Federal Bank brand have enabled it to establish a competitive position in the market.
ICICI Securities, Equirus Capital, IIFL Securities and JM Financial are the book running lead managers to the issue.
FedFina is the fastest growing gold loan NBFC in India. Currently, it is present in 15 states and union territories across India with a strong presence in Southern and Western regions.
As of September 2021, it covered 136 districts in 15 states and union territories in India through 463 branches and 86.25 percent of its total loan assets are secured against tangible assets, namely gold or customer’s property.
Its installment loans to MSMEs and ESEIs had an AUM of Rs 2,933.83 crore and gold loans had an AUM of Rs 2,132.92 crore.
As of September, Federal Bank its gross and net NPAs were at 2.2 percent and 1.6 percent while in FY21 it was at 1.01 percent and 0.71 percent respectively. Its total AUM was at Rs 5,246.74 crore as of September 2021 against Rs 4,862.43 crore in FY21.
For FY21, the lender reported a net interest income (NII) of Rs 344.92 crore against Rs 220.53 crore a year ago. Net profit for the year stood at Rs 61.68 crore versus Rs 39.14 crore last year.
Gross loan book for the year stood at Rs 4,627.04 crore versus Rs 3,720.25 crore last year. As of September 2021, its NII stood at Rs 216.40 crore while net profit stood at Rs 33.57 crore.