Blackstone Group and World Bank arm International Finance Corporation (IFC) backed Fino Payments Bank has filed draft papers with the market regulator Securities and Exchange Board of India (SEBI) for an initial public offering (IPO).
The IPO size is likely to be of Rs 1,300 crore, as per market sources.
The IPO includes a fresh issue of Rs 300 crore as well as an offer for sale (OFS) component of up to 1.56 crore of equity shares, as per the draft red herring prospectus (DRHP).
The bank may consider a pre-IPO placement aggregating up to Rs 60 crore. If such placement is completed, the fresh issue size will be reduced.
The IPO proceeds will be utilised for augmenting the Bank’s tier – 1 capital base to meet its future capital requirements. Payment banks are required to maintain a capital ratio of minimum 15% while Fino’s CRAR (capital-to-risk weighted assets ratio) stood at 56.25% as in March 2021.
Fino Payments Bank’s other marquee investors are ICICI Group, Mauritius-based Headland Asian Ventures Fund 3 Ltd (HAV 3 Holdings), a fund advised by Headland Capital Partners, Intel Capital Corporation, the venture capital arm of chipmaker Intel Corporation, and Bharat Petroleum Corporation Limited, among others.
The bank also comprises government banks including Indian Bank, Union Bank of India, Corporation Bank and Life Insurance Corporation of India (LIC) as its key shareholders.
The public listing proposal comes four years after starting operations as a payments bank serving emerging Indian market with its digital-based financial services.
Fino Payments Bank is a fully-owned subsidiary of Fino Paytech Limited (FPL), a Mumbai based technology-enabled financial inclusion solutions provider.
The fintech bank turned profitable in the fourth quarter of FY20, within three years of starting operations. This makes Fino Payments Bank the first profitable fintech to file for an IPO.
While there are no listing requirements, the Reserve Bank of India (RBI) guidelines allow payments banks to apply for an on-tap licence to convert into a small finance bank (SFB) after completing five years of operations.
Besides Fino Payments Bank, its peer Paytm is the other entity in the payment banking space to have filed for an IPO.
As per the DRHP, in FY21 Fino Payments Bank’s platform has facilitated more than 434 million transactions having a gross transaction value of Rs 1.32 lakh crore.
It has among the largest network of micro ATMs as of March 2021 with a market share of 55%, a merchant network of 6.4 lakhs and 25.7 lakh bank accounts.
Its revenue for FY21 stood at Rs 791 crores that grew at a CAGR of 29% in last three years. The bank registered a profit of Rs 20.5 crore in FY21 as against a full year loss of Rs 32 crore in FY20 with an annual average ROE of 15% in FY21 versus -19.6% in FY20, the DRHP states.
Investment bankers appointed to the issue are Axis Capital Ltd, CLSA India Pvt Ltd, ICICI Securities Ltd and Nomura Financial Advisory Services Pvt Ltd.