Capital Small Finance Bank Files Draft Prospectus For IPO

Capital Small Finance Bank Ltd. filed its draft red herring prospectus with the market regulator on Monday for its initial public offering.

The bank, according to the prospectus, intends to raise capital through a fresh issue of equity shares worth Rs 450 crore apart from an offer for sale of 38.4 lakh shares by existing shareholders.

The IPO will see sale of up to 3.37 lakh shares by PI Ventures LLP, up to 6.04 lakh shares by Amicus Capital Pvt. Equity I LLP, and 8.36 lakh shares by Oman India Joint Investment Fund II, among others.

Edelweiss Financial Services Ltd., Axis Capital Ltd., and SBI Capital Markets Ltd. are the lead managers to the issue.

The five-year-old bank, promoted by Sarvjit Singh Samra and his family, has a network of 159 branches and 161 ATMs, focusing on Punjab, Haryana, Rajasthan, and Delhi.

The bank posted a profit of Rs 40.78 crore in the year ended March 2021 compared with Rs 25.38 crore in the preceding year. It had deposits worth Rs 5,284 crore as of June 30, while loans and advances stood at Rs 3,642 crore.

Net non-performing assets stood at 1.44% or Rs 52.6 crore, while provisions and contingencies rose to Rs 10.4 crore as of June 30. The CASA ratio was at 40.48%, and the capital adequacy ratio was maintained at 21.12%, well above the RBI's minimum requirement of 15%.

According to the prospectus, the funds would be utilised for augmentation of the bank's tier-I capital base. The bank expects future capital requirements to rise owing to growth in lending and investment portfolios.

Headquartered in Jalandhar, Punjab, Capital Small Finance Bank started operations in 2000 as Capital Local Area Bank. In 2016, it received in-principle approval from the RBI to set up a small finance bank, alongside nine others.

(Corrects an earlier version that misstated the bank's net profit for FY20 and FY21.)