- Date : 28/07/2023
- Read: 3 mins
FedFina, Federal Bank's NBFC arm, renews IPO plans. Focusing on growth and emerging sectors, the company aims to bolster its capital base and seize market opportunities.
In a strategic move to bolster its capital base and expand operations, Fedbank Financial Services Limited (FedFina), the non-banking financial arm of Federal Bank, has refiled draft papers for an Initial Public Offering (IPO). This decision comes after the company aborted its IPO plans last year due to challenging market conditions. With a fresh issue of equity shares worth ₹750 crore and an offer-for-sale component, FedFina aims to seize the current favourable market sentiments and capitalise on its strong performance.
- FedFina refiles IPO plans after overcoming unfavourable market conditions.
- Fresh issue of ₹750 crore to strengthen Tier-I capital base.
- Strategic focus on self-employed and MSME sectors for sustainable growth.
- Impressive 33% CAGR in AUM boosts investor confidence.
- Federal Bank and True North to divest partially through the offer-for-sale component.
IPO Refiling and Stakeholders
The refiled Draft Red Herring Prospectus (DRHP) includes a ₹750 crore equity share issue and an offer-for-sale of up to 70,323,408 equity shares. The IPO proceeds will bolster the company's Tier-I capital base and cover the offer expenses. Federal Bank, holding a 74% stake in FedFina, plans to sell up to 16,497,973 equity shares, while True North Fund VI LLP may sell up to 53,825,435 equity shares.
Strategic Focus on Emerging Sectors
FedFina has earned recognition as one of India's top five NBFCs, supported by private banks. Its strategic focus is serving self-employed individuals and MSMEs, positioning the company for further growth and sustainability.
Utilisation of IPO Proceeds
The net proceeds from the IPO will be directed towards enhancing the company's Tier-I capital base, supporting future expansion and asset base growth. This move aims to seize growth opportunities in the dynamic financial landscape while streamlining the IPO process by covering offer expenses.
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Book Running Lead Managers and Registrars
The Book Running Lead Managers (BRLM) for the IPO are ICICI Securities Ltd, BNP Paribas, Equirus Capital Private Ltd, and JM Financial Ltd. Link Intime India Private Limited will serve as the offer's registrar, ensuring a smooth process for potential investors.
A Steady Growth Trajectory
FedFina has demonstrated resilience and strong performance despite challenges in the past year. With an impressive three-year CAGR of 33% in Assets Under Management (AUM) between fiscal years 2020 and 2023, as reported by Crisil, investor confidence in the company has grown significantly.
Final Thoughts
Investors should closely monitor FedFina's IPO launch, considering its strong growth trajectory and strategic focus on emerging sectors, as it presents a potential opportunity to participate in the company's expansion and capitalise on the current favourable market conditions.
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Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.
