Kolkata: Ujjivan Financial Services Ltd looks to bring down its foreign holding up to 45 per cent, a critical requirement for promoting a small bank.
The microfinance company is entering the capital markets with an IPO of around Rs 880 crore on April 28.
"According to regulatory requirement, the foreign holding in the small bank has to be less than 49 per cent. IPO is the first step towards transformation to a small finance bank. Foreign shareholding has come down to 77 per cent following a pre-IPO placement. The IPO will help reduce further to 44-45 per cent," Ujjivan MD and CEO Samit Ghosh said.
Foreign holding in Ujjivan was as high as 90 per cent, which turned into a professionally-run institution over last 10 years.
Ujjivan Small Bank, promoted by Ujjivan Financial Services as a wholly-owned holding company, will be launched by January-April 2017, Ujjivan strategy executive Rajat Singh said.
"The entire business will be moved to the bank. Some 40 per cent of our existing 470 branches spread across 24 states will be brought under the bank branches in the initial phase," he said.
Out of some eight microfinance companies receiving small bank licences, Ujjivan is the second after Equitas that is hitting the capital market.
Ujjivan will approach regulators for a reverse merger of the bank and its holding company (Ujjivan Financial Services) later to overcome another hurdle to list the bank in the next three years.
"There is no meaning in keeping two entities for one business. We will approach the regulators," Mr Ghosh said.
The IPO is priced at a band of Rs 207-210 per share of Rs 10 each.
The pre-IPO placement raised Rs 291 crore at Rs 205 a share. The IPO consists of fresh issue that could raise up to Rs 358 crore.
In the current IPO, Ujjivan Financial will provide an exit route to some of the existing foreign shareholders and the rest will be used for capital requirements.