Federal Bank Ltd subsidiary Fedbank Financial Services Ltd (FedFina) has filed draft papers with the Securities Exchange Board of India to raise funds through an initial public offering (IPO).
The IPO comprises a fresh issue of Rs 900 crore and an offer for sale (OFS) of up to 45.71 million shares by its existing shareholders and promoters.
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The OFS consists of up to 16.50 million shares by Federal Bank and up to 29.22 million shares by True North Fund VI LLP. Federal bank owns a 73.31% stake while True North Fund VI LLP has a 25.76% stake in FedFina.
Federal Bank will continue to hold more than 51% of the outstanding share capital after the completion of this offering. The private lender says that its long operating history, track record, management expertise and the ‘Federal Bank’ brand have enabled it to create a competitive position for itself in the market it serves and create trust among its customers, lenders, regulators and investors.
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The net proceeds from the issue would be used for augmentation of its Tier- I capital base to meet its future capital requirements, arising out of the growth of business and assets.
ICICI Securities, Equirus Capital, IIFL Securities and JM Financial and JM Financial are the books running lead managers to the issue.
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FedFina acquired receipt of its NBFC license in 2010. It is a retail-focused NBFC arm of Federal Bank. At present, 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% of its total loan assets are secured against tangible assets, namely gold or customer’s property.
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Its instalments loans to MSMEs and ESEIs had an asset under management (AUM) of Rs 2,933.83 crore and gold loans had an AUM of Rs 2,132.92 crore.
In the first half of FY22, its gross NPAs stood at 2.2% and net NPAs were at 1.6%. In FY21 gross and net NPAs were at 1.01% and 0.71% respectively. As of September 2021, its total AUM was Rs 5,246.74 crore and Rs 4,862.43 crore in FY21.
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IN FY21, the bank reported a net interest income (NII) of Rs 344.92 crore as compared to Rs 220.53 crore in the year-ago period. It reported net profit for the year at Rs 61.68 crore versus Rs 39.14 crore last year. In the first half of FY 2021, its NII stood at Rs 216.40 crore while net profit stood at Rs 33.57 crore.