Capital Small Finance Bank Files Draft Red Herring Prospectus For IPO

The lender plans to raise Rs 450 crore via fresh issuance of equity shares and an offer-for-sale of up to 24.12 lakh shares.

<div class="paragraphs"><p>The BSE building (Source: Reuters)</p></div>
The BSE building (Source: Reuters)

Jalandhar-based Capital Small Finance Bank Ltd. has submitted a draft red herring prospectus for an initial public offering. It plans to raise up to Rs 450 crore through a fresh issue of equity shares at a face value of Rs 10 each.

The IPO also includes an offer for the sale of up to 24.12 lakh equity shares, the company said in the prospectus submitted to the Securities and Exchange Board of India.

The offer for sale comprises up to 8.37 lakh shares held by Oman India Joint Investment Fund II, 3.37 lakh shares by PI Ventures, 6.05 lakh shares by Amicus Capital Private Equity I, 70,178 shares by Amicus Capital Partners India Fund-I, and 5.64 lakh shares by other shareholders.

Nuvama Wealth Management, DAM Capital Advisors Ltd., and Equirus Capital Pvt. are the lead managers of the issue.

These funds will be utilised to boost the lender's Tier-I capital for its future capital requirements, the lender said. Capital Small Finance Bank's increased capital needs "are expected to arise out of growth in our bank’s assets, primarily our bank’s loans and investment portfolio", the DRHP stated. Further, it would also ensure compliance with regulatory requirements on capital adequacy prescribed by the Reserve Bank of India.

Capital Small Finance Bank filed a DRHP in November 2021 and was granted approval to launch its IPO too. However, there was a delay in its launch due to prospects of lower fundraising amid a global economic slowdown, aggressive rate hikes, and soaring inflation.

The bank posted a profit of Rs 93 crore in the year ended March 2023, compared with Rs 63 crore in the preceding year. It had deposits worth Rs 6,560 crore as of March 31, while loans and advances stood at Rs 5,507 crore.

Net non-performing assets stood at 1.36% or Rs 74.05 crore, while provisions and contingencies rose to Rs 78.6 crore as of March 31. The CASA ratio was at 41.88%, and the capital adequacy ratio was maintained at 18.87%, well above the RBI's minimum requirement of 15%.

Headquartered in Punjab, the 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.

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