As per the RBI rule Ujjivan Small Finance Bank Launched Its IPO:
In Dec 2019, the Ujjivan Small Finance bank is going to 2nd highest creditor in the market. It wants to collect nearly Rs 1,000 crores from the Investors. According to the RBI rules, the moneylender compulsory to list their IPO’s in 3 years.
Rs 250 Crores collected by the company from the Pre IPO events. In this, Rs 132 crores from IIFL, and Rs 32 crores from Avendus Capital. The remaining Rs 750 crores of the amount, it plans to raise from the IPO. They want to collects 75% from QIBs, 15% from HNIs, and 10% from the individual investors.
Mr. Nitin Chugh, CEO of Ujjivan company said that they want to reduce the share of the promoter, and the plans to utilize the IPO money in future 2.5 years.
According to the certification purpose, if the parent company already listing in the stock market, then also the bank needs to list within 3 years.
The company requesting the RBI, the Ujjivan financial service is already having a listing IPO. The Ujjivan Small Financial Bank is the only company for it. The RBI said, the rules not only applicable for the parent company, but it was applicable for which company approach to RBI for certification, they need to list.
In the bank, the shares of the company will be decreases from 95% to 85%. In 5 years, they need to decrease their shares to 40% and remaining shares utilize for sale at that time. By the ending of 5 years, they have a reliving period for the promoter to leave from the company. This scheme is available in the Small Financial Banks. And they are allocated 10% of shares for the shareholders in subscription time.
What purpose Ujjivan Small Finance bank wants to use the money?
The issued amount will be used for company expansion. There is no problem in company expansion, previously their microfinance company raised 35%. And MSME having 100% growth. the company will be having Rs 6,400 crores after succeeding in the IPO. It has Rs 12,000 crores in the loan book, 79% from microfinance, 9.6% from affordable housing, and 6.80% from MSME. In the loan book, Tamil Nadu is in the highest place with 16%, next, Karnataka with 14.5% and West Bengal with 13%. Till 30th March 2019, they have 552 branches and got approval for 574 branches.