Kolkata-based Bandhan Bank plans to raise Rs 4,473 crore via the launch of its initial public offer (IPO) on March 15. This will be the first public offer for a private sector lender this year. We look at key things to know about this offer.
1. Over 11.9 crore equity shares valued between Rs 4,430 crore and Rs 4,473 crore at a price band of Rs 370-375 per share will be offered to the public. The IPO will comprise a fresh issue of 97,663,910 shares, an offer for sale for up to 14,050,780 shares by World Bank-controlled International Finance Corp (IFC) and up to 7,565,804 shares by the IFC FIG Investment Co.
2. Post the IPO, the bank's holding will be diluted to around 82 per cent, from around 89 per cent at present. The bank, which had transferred its entire microfinance business to Bandhan Financial Services in 2009, received RBI approval to start banking operations in April 2014 and started its operations in August 2015.
3. The book running lead managers to the IPO are Kotak Mahindra Capital Company, Axis Capital, Goldman Sachs (India) Securities, J M Financial Institutional Securities and J P Morgan India.
4. Bandhan Bank began operations on August 23, 2015 when Bandhan Financial Services Limited (BFSL), its parent company, transferred entire microfinance business to the bank. Since then, the bank has expanded to 864 branches servicing approximately 11 million customers located in 33 states as of September 30, 2017.
5. It started operations with 501 branches servicing approximately 7 million customers located in 24 states across India as of August 23, 2015. The number of ATMs and dedicated door step services centres (DSCs) stood at 386 and 2,546 as of September 30, 2017, respectively compared with from 50 and 2,022 as of August 23, 2015.
6. Interest earned during fiscal year 2017 represented 90.48% of its total income (interest earned plus other income). The bank's gross advance to deposit ratio as of September 30, 2017 stood at 76.54%.
7. The bank had a healthy capital adequacy ratio (CAR)of 26.24% in September 2017. The RBI requires a minimum capital adequacy ratio of 13% of a bank's total risk-weighted assets. The capital adequacy ratio (CAR) measures percentage of a bank's risk weighted credit exposures.
8. The bank clocked net interest margins (NIMs) of 10.01% and 10.39%, for the half-years ended September 30, 2017 and 2016. Net interest margin is calculated by dividing the difference of investment income and interest expenses by the average earning assets. Its return on equity (RoE) came to 27.23% and 28.79%, respectively for the above period.
9. As of December 31, 2017, Bandhan Bank's deposits stood at Rs 25,293 crore, and advances at Rs 24,463 crore. On the microfinance side, the bank has a net worth of 2,600 doorstep service centres and 9.6 million micro-loan customers.
10. The bank's net interest income in FY 2017 amounted to Rs 24,034.98 million compared to FY 2016 amounted to Rs 9,328.36 million.