Money & Banking

Ujjivan to dilute promoter stake by 10-15%

Mumbai | Updated on August 21, 2019 Published on August 21, 2019

The SFB may do a re-think on listing if market conditions remain volatile

Ujjivan Small Finance Bank plans to dilute promoter stake in the bank by 10 to 15 per cent. This will include selling 10 per cent equity in the planned initial public offering (IPO), along with granting employee stock options and an employee stock purchase scheme.

“Taking all these into account, the total stake dilution will be between 10 per cent and 15 per cent, taking the promoter shareholding down to about 85 per cent,” sources close to the development told BusinessLine.

Ujjivan Financial Services (UFS) is the holding company and promoter of its 100 per cent subsidiary, Ujjivan SFB.

The SFB, which has just last week filed its draft red herring prospectus with SEBI, is keen on listing by November, but could do a re-think if market conditions remain volatile.

Under RBI norms, SFBs have to list within three years of operations, and the promoter shareholding should be lowered to 40 per cent in five years. Ujjivan SFB has, till January 2020, to meet the listing deadline.

Reverse merger

Sources said the bank has also been in talks with the RBI to go in for a reverse merger after five years, which will in effect bring down the promoter stake to zero. “The RBI has indicated the bank should approach them at the end of five years, but it seemed amenable to the plan,” the source added.

According to the DRHP, the bank seeks to raise ₹1,200 crore, including reservation of equity shares of up to ₹120 crore. The shares are being offered at a face value of ₹10 each. Meanwhile, Nitin Chugh is understood to have begun work at Ujjivan SFB, and will take over as the Managing Director and CEO after current incumbent Samit Ghosh retires at the end of November.

“Chugh has already joined and is working along with Ghosh to understand the functioning of the bank. He will take charge from December,” said another person close to the development.

Ujjivan SFB had, in May, announced the appointment of Chugh, who was earlier the digital banking head at HDFC Bank, as its new MD and CEO.

Published on August 21, 2019
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