CSB Initial Public Offer (IPO) To Open On Friday. Should You Invest?

Written by Peter Noronha

21 Nov 2019, 09:23 PM IST

CSB Bank plans to raise up to Rs 410 crore to expand its Tier-I capital.

Kerala-based private sector lender CSB Bank (Catholic Syrian Bank) will launch its initial public offering (IPO) for subscription on November 22. The public offering will be open for subscription for five days from November 22 to November 26, although the offer period for anchor investor would be one day prior to the IPO opening i.e. November 22. The shares will be allotted on December 2, 2019 and listed on both National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on December 4. CSB, one of the oldest private sector banks in India, has a customer base of nearly 13 lakh people (as on March 31, 2019).

CSB IPO: Here are details of price band, issue size and brokerage calls for Initial Public Offering

CSB IPO Price Band

The price band of CSB Bank public offer has been fixed at Rs 193 to Rs 195 per share. An investor can apply for a minimum of 75 shares and multiples thereafter, according to an Emkay report.

CSB Bank Issue Size

CSB Bank plans to raise up to Rs 410 crore to expand its Tier-I capital. The CSB Bank IPO comprises a fresh issue of shares worth Rs 24 crore and an offer for sale (OFS) of 1.97 crore shares worth Rs 385 crore by existing investors, according to the report.

A total of 75 per cent of the offer is kept aside for qualified institutional buyers (QIBs), 15 per cent is reserved for non-institutional investors and 10 per cent for retail investors. Following the fresh issue of shares, promoter entity Fairfax India Holdings' stake in CSB Bank will fall to 49.73 per cent from the current 50.09 per cent. The bank's promoter has five years to reduce its holding to 40 per cent and 15 years to go down to 15 per cent in compliance with RBI requirements.

Should you invest in CSB Bank?

According to the report, CSB Bank has done reasonably well in its first phase of transformation over the past 2-3 years, reducing the influence of unions/a religious institution, rationalizing branches/employees and turning it from a capital-starved bank into a capital-excess bank after on-boarding investor-cum-promoter Fairfax.

"We believe that the second phase of transformational journey to take the bank to new growth phase will be challenging, particularly given current stressed scenario and rising competitive intensity, where even established (Federal Bank) and promising banks (RBL) have slipped," Emkay said in its pre-IPO report.