Private equity and venture capital-backed Capital Small Finance Bank, India's first small finance bank, has secured an equity investment from Max Life Insurance Company Limited for a minority equity stake in the lender at a valuation of over Rs 1,600 crore.
Max Life Insurance Company Ltd has been allotted a total of 10.58 lakh equity shares for a total consideration of Rs 49.5 crore. Each equity share has a face value of Rs 10 and an additional premium of Rs 458 per share, as per the statement by the bank.
“As a result of this allotment, Max Life Insurance Company Ltd now holds a 2.99% stake in the post-issue equity shareholding,” the statement said.
Backed by private investors such as Amicus Capital, Oman India Joint Investment Fund (OIJIF) and Pi Ventures, Capital Small Finance Bank (SFB) is also set to refile for an initial public offering (IPO) after its SEBI approval to raise fresh capital of Rs 450 crore received in February last year ended.
The bank's other investors include HDFC Life, ICICI Prudential Life and Small Industries Development Bank of India (SIDBI).
Headquartered at Jalandhar in Punjab, the lender has marked the latest fundraise from Max Life Insurance at a pre-money valuation calculated at Rs 1603 crore ahead of its planned public listing or initial public offering.
The post-money valuation of Capital SFB was determined to be Rs 1,652 crore, reflecting the bank's estimated value after considering the infusion of funds or investments, the statement added.
The strategic investment by Max Life Insurance is projected to increase the Capital Adequacy Ratio (CAR) of Capital SFB by more than 1%, raising it to 20.77%, maintaining the regulatory compliance of 15% and its financial strength.
"This investment marks a significant milestone for Capital Small Finance Bank and reinforces our commitment to delivering exceptional value to our customers," said Sarvjit Singh Samra, MD and CEO, Capital Small Finance Bank.
Last month, the lender had announced partnership between the two financial companies to offer Max Life’s offerings including a range of savings, protection, retirement, and group life insurance plans to Capital SFB’s customers.
Founded in 2000 by Samra, the bank transitioned from Capital Local Area Bank to Capital SFB starting banking operations as India's first SFB on April 24, 2016.
From 47 branches then, today it has presence of over 165 branches across Delhi, Haryana, Rajasthan, Himachal Pradesh along with Union Territory of Chandigarh extending small and medium enterprise and trading loans, agriculture loans, housing and other loan product offerings primarily to small borrowers.
For the previous financial year ending March 2023, the bank's total business grew by 12% to Rs 12,000 crore. This is targeted to increase to more than Rs 14,000 crore by the end of FY24 ending March in the current fiscal year.
For FY23, the bank had registered a profit after tax at Rs 93.6 crore as compared to Rs 62.5 crore in 2021-22. Its total advances 17% from a year ago to Rs 5,507 crore as on March end 2023, while its deposits stood at Rs 6,560 crore, with current and savings deposit share at 42%.
The bank has raised around Rs 283 crore equity capital so far.