Fedbank Financial IPO: NBFC raises ₹330 cr via a pre-IPO placement

Federal Bank-promoted Fedbank Financial Services Ltd has raised ₹329.99 crore through a pre-IPO placement of 23,571,428 equity shares at the upper end of the price band ₹140 per equity share as approved by the board on November 20, 2023.

The pre-IPO placement comprises 1,112,141 equity shares amounting to ₹15.57 crore allotted to SBI Life Insurance; 1,627,475 equity shares worth ₹22.785 crore allotted to Star Union Dai-chi; 6,030,716 equity shares worth ₹84.43 crore allotted to SBI Life Insurance; 3,928,571 shares worth ₹55 crore allotted to Yasya Investments; 3,729,668 shares worth ₹52.215 crore allotted to Star Union Dai-chi; 3,928,571 equity shares worth ₹55 crore allotted to Nuvama Crossover III; 3,214,286 equity shares worth ₹45 crore allotted to Nuvama Crossover IIIA.

The percentage of the pre-offer share capital of the company after the transfer for the top three stakeholders stands at 71.44% for Federal Bank; 19.01% for True North Fund VI LLP and 2.19% for SBI Life Insurance.

Fedbank Financial Services, which is one among five private bank-promoted NBFCs in India, focuses on catering to the MSMEs and the emerging self-employed individuals (“ESEIs”) sector.

Fedbank Financial will open its IPO of equity shares on Wednesday, November 22, 2023. The issue comprises a fresh issue of equity shares up to ₹600 crore and an offer for sale of up to 35,161,723 shares by selling shareholders. The price band of the offer has been fixed at ₹133 to ₹140 per equity share.

In an exclusive interview with Fortune India, Anil Kothuri, the managing director and chief executive officer of Fedbank Financial Services (Fedfina), says: “As of June 2023, the company had capital of ₹1,415 crore, and we seek to raise ₹600 crore in the issue that will significantly take up our levels of capital increase by around 30%. We believe the raised capital should be good enough to last us for the next maybe three years or so."

Equity shares will be listed on the BSE and NSE. For the purposes of the offer, the designated stock exchange will be the NSE. The offer also includes a reservation aggregating up to ₹10 crore for subscription by eligible employees and a discount of up to ₹10 per share of the offer price to eligible employees.

Fedbank says the net proceeds from the fresh issue will be used towards augmenting tier–I capital base to meet its future capital requirements, arising out of the growth of business and assets. A part of the proceeds will be used towards meeting offer expenses. ICICI Securities Limited, BNP Paribas, Equirus Capital Private Limited and JM Financial Limited are the Book Running Lead Managers to the Issue.