Utkarsh Small Finance Bank files fresh draft papers; cuts IPO size

Utkarsh Small Finance Bank has refiled preliminary papers with capital market regulator Sebi and reduced its initial public offering (IPO) size to Rs 500 crore from Rs 1,350 crore planned earlier.

The company filed the paper afresh as the regulator’s one-year approval given to the Varanasi-headquartered small finance bank (SFB) to launch IPO expired last month.

Under the Sebi’s regulations, a firm gets one year to hit the primary market after receiving approval from the market regulator. In case a firm fails to do so during this period, it has to refile the prospectus with the Securities and Exchange Board of India (Sebi), seeking fresh clearance.

According to a fresh draft red herring prospectus (DRHP) filed on Friday, the SFB’s Rs 500 crore IPO is a complete fresh issue of shares and the entire proceeds will go to the bank.

The lender may consider the issue of securities aggregating up to Rs 100 crore in a pre-IPO placement round. If such placement is undertaken, the fresh issue size will be reduced.

Proceeds from the fresh issue will be utilised to augment the lender’s tier 1 capital base to meet future capital requirements.

Incorporated in 2016, Utkarsh commenced operations in 2017 and its product suite includes a range of products, including saving accounts, salary accounts, current accounts, recurring and fixed deposits and locker facilities.

As of March 31, 2022, its operations are spread across 22 states and Union Territories with 686 banking outlets and 12,617 employees, serving 3.14 million customers majorly located in rural and semi-urban areas, primarily in Bihar, Uttar Pradesh and Jharkhand.

Its gross loan portfolio grew from Rs 6,660.95 crore as of March 31, 2020, to Rs 10,630.72 crore as of March 31, 2022, and total deposits almost doubled from Rs 5,235.21 crore to Rs 10,074.18 crore during the period.

Earlier in March 2021, Utkarsh had filed draft papers with Sebi to raise Rs 1,350 crore through the IPO. It was seeking the issuance of fresh shares amounting to Rs 750 crore and an offer for sale of up to Rs 600 crore. The lender had received Sebi’s go-ahead to float the IPO in June last year but didn’t launch the initial share sale.

ICICI Securities and Kotak Mahindra Capital Company are the book-running lead managers to the issue.

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