FedBank Financial Services will take a call on the timing of its initial public offering (IPO) in May this year.
“We hope to take a decision on when to list sometime in May,” said Anil Kothuri, Managing Director and CEO, Fedbank Financial Services (FedFina).
In an interaction with BusinessLine, Kothuri said the company hopes to get approval from SEBI for its draft documents by mid-April. The year-end audited numbers would also be prepared by the end of April.
“SEBI clearing our DRHP and year-end audit will take us to May 1,” Kothuri said, adding that the timing of the IPO will depend on the global environment and market sentiment following the Russian invasion of Ukraine.
FedFina had filed its DRHP on February 20 for an IPO, which will comprise a fresh issue of equity shares by FedFina aggregating up to ₹900 crore and an offer for sale (OFS) of up to 4.57 crore shares.
As part of the OFS, its promoters Federal Bank would sell up to 1.64 crore shares and True North Fund VI LLP would offload up to 2.92 crore shares.
Post the IPO, its public float would be about 27-28 per cent depending on the pricing of the issue.
Kothuri said the proceeds from the IPO would help the NBFC fuel its growth plans.
Growth plans and opportunities
“We are a growing lending business and we need to set aside 20 per cent as capital. We intend to grow at a pace higher than the rate of return. The money that we raise will help support growth for the next two-and-a-half to three years,” he said.
The NBFC, which offers products including gold loans, home loans, loans against property (LAP) and business loans, is confident about growth opportunities and believes that demand is bouncing back post the pandemic.
“Demand in the segment we serve has bounced back quite sharply. People have begun to go out, economy has come back to normal. There is a renewed demand for working capital loans,” Kothuri said, but noted that the distress has not entirely abated.
“Collection efficiency is back to pre-Covid level. But the same collection requires greater effort, cash flows are still under stress,” he said, adding that this is more true for urban areas than rural areas.
By December 31, 2021, assets under management of FedFina exceeded ₹5,500 crore and it had a capital adequacy of 23.85 per cent.