Equitas Holdings Limited IPO Message Board (Page 90)

i think equitas may list around 132

Equitas to bulk of IPO money for its bank: Vasudevan PN, MD

Equitas Holdings, which last year got an in-principle approval from the RBI to become a small finance bank, is coming out with an initial public offering (IPO) on April 5. In an inetrview with Pratik Bhakta and Shilpy Sinha, company''s managing director Vasudevan PN, said that Equitas would its existing 2.7 million clients and develop an elaborate business correspondent network to build its low-cost deposits books. Edited excerpts:

How much capital do you want to raise and how do you plan to it? We want to raise about Rs 720 crore through the initial offer. The price band of our issue has been kept at Rs 109-110, and we are planning to sell around 13.24 crore shares. Of the Rs 720 crore that we would like to raise, Rs 620 crore would be invested in the bank and the remaining Rs 100 crore would be with the holding company which we would to off all the expenses of the IPO, and also extend as a loan to the subsidiaries.

How would you be restructuring your business? There would be three basic corporate actions from our side. First, the IPO which is primarily aimed at reducing the foreign holding in the company from 93 per cent currently to around 35 per cent. Second would be merging the three subsidiaries for which a petition has been filed with the Madras High Court. The third corporate action is to have a certification of our IT readiness for doing banking transactions, and that''s also under way.

How would the lending business change for Equitas? Equitas is not only a micro finance company, but it also has a diversified loan book across housing finance, used commercial vehicle finance and small and medium enterprise (SME) finance. For the SME financing product, which has an average lending size of Rs 1.7 lakh and lends to 45,000 customers, the company boasts of non-performing assets of 0.3 per cent.

How do you plan to mobilise funds for deposits after becoming a bank? We already have a client base of 2.7 million for our micro finance business and we have to ensure that they put money in our bank account rather than putting in any informal savings scheme. Our field staff who anyway visit our clients regularly will also take deposits for services like recurring deposits. We plan to develop an army of 25 business correspondents per branch. These correspondents would help us reach out to the rest of the community.

How do you plan to develop your branch network? We have 539 branches currently, but our board has to take a call on how many of these branches would be converted into a combined liability branch.

Let''s hope he walks the talk...

i have met Mr Vasu very good administrator and down to earth and i think he is Chartered Secretary bcoz i have seen his articles in the journal not sure anyway.....If anyone can do this this is man IMO

Equitas IPO to bring down foreign holding to 35% from 93%

Chennai-based Equitas intends to raise nearly Rs2,176 crore through the IPO that opens on 5 April. RBI guidelines for the small finance banks mandate a foreign shareholding limit of 49%.
Foreign ownership in small finance bank licence holder Equitas Holdings Ltd, which currently stands at 92.64%, will drop to near 35% following its initial public offering (IPO), two people in know of the matter said.

Twelve foreign investors propose to sell 132.24 million shares in the three-day public issue, the people said.

With foreign holding falling below the 49% limit by the Reserve Bank of India (RBI), foreign portfolio investors will be able to trade in the stock post listing, which will create liquidity on the counter.

“Logically it (selling of shares by existing shareholders in the issue) implies that foreign shareholding will foreign investors after listing and could have a positive impact on the stock price,” said one of the persons cited above, who did not want to be named.

RBI guidelines for the small finance banks mandate a foreign shareholding limit of 49%. At all times, at least 26% of the paid-up capital will have to be held by residents or domestic investors, said the central bank’s statutory guidelines for the small finance banks in November 2014.

As part of the IPO, six foreign investors will fully exit their holdings. They are Sequoia Capital India Investments III, Aavishkaar Goodwell India Microfinance Development Co. Ltd, Aquarius Investments Ltd, MVH SpA, Lumen Investment Holdings and WestBridge Ventures II Llc, as per information made available in the red herring prospectus.

Other foreign investors selling a part of their shares include World Bank arm International Finance Corp., Dutch development finance institution FMO and Helion Venture Partners Llc. Equitas’ founder P.N. Vasudevan, who owns 3.17% stake in the firm, will also sell a part of his holding, according to the RHP.

A red herring prospectus is an offer document approved by the market regulator Securities and Exchange Board of India (Sebi) that can be used for officially launching and marketing a public issue.

“There is demand among foreign investors and the share sale creates a lot of room for them,” said the second person who too did not want to be named.

The Chennai-based microfinance lender intends to raise nearly Rs.2,176 crore through the public issue that opens on 5 April. The issue will close on 7 April. The anchor book will open on 4 April. Equitas Holdings has a price band of Rs.109-110 per share, and will allot 197.7 million shares at the upper price band and 198.3 million shares at the lower band.

On 28 March, Mint reported that the share sale at the upper price band will value Equitas Holdings at price-to-book value (PBV) multiple of about 2.2 times. PBV multiple is a ratio used to value financial institutions.

Equitas Holdings will be valued at Rs.3,700 crore post its listing, the company said in a press conference on Tuesday. The company received approval for its IPO from Sebi on 29 December.

Equitas’ revenue increased 56% to Rs.755.9 crore in 2014-15 from Rs.483.5 crore in the previous year, data from the company’s IPO filings show. Last fiscal, the firm reported a profit of Rs.106.6 crore, an increase of 44% over the previous year’s profit of Rs.74.1 crore. The company disbursed fresh loans of Rs.3,606 crore in fiscal year 2015.

Another small-finance-bank licensee, Ujjivan Financial Services Ltd, also plans to tap the primary markets. Ujjivan filed its draft prospectus with Sebi on 31 December and received regulatory approval last month. The company is yet to finalize the launch date for its share sale.

In February, Ujjivan raised Rs.312 crore from domestic investors in a pre-IPO placement round to convert itself to a small finance bank from a micro-lender. About 33 domestic investors, including institutional investors like HDFC Standard Life Insurance Co. Ltd, Shriram Life Insurance Co. Ltd and Bajaj Allianz General Insurance Co. Ltd participated in the round. The pre-IPO placement was done at a PBV multiple of 2.1 times.

So far this year, five firms have raised approximately Rs.2,385 crore through the IPO route.

Absolutely...this is exactly why I feel that the stock will see buoyancy post listing...

Issue price is reasonable as they can tap only domestic investors to comply with RBI guidelines...pool available with domestic investors to commit to a single offering tends to be limited...

Once shares are allotted at reasonable price...the FIIs who were kept hungry will pick up in first few days of listing...

I am very hopeful about this one!

1. Conversion into SFB will help reduce the funding costs as company would be able to accept deposits from public @8-9% (1-2 yrs time deposits + still cheaper CASA) instead of currently 12-13% being mostly Banks).

2. But its operating costs are expected to increase. It’s loans so far are of small amounts and its deposits will also likely be very small. Hence its transaction costs are going to be higher than its competitors. So for the first few years (2-3 years), its profitability will be under pressure & RoE will decline. Whether or not it succeeds as a bank depends entirely on its ability to scale up its deposit base as well as AUM.

3. Bandhan vs Equitas:- Bandhan Bank is the only known case of conversion from MFI to Bank. Although Bandhan has Universal bank license (vs Equitas’s SFB) but their paths are similar. Bandhan raised capital in Aug15 @ 2.9x P/BV. It was the largest MFI at that time at INR 10,000 Crores AUM (more than double of Equitas). As an MFI Bandhan had RoE of 28-30% much higher than Equitas’s 12% which puts into perspective lower (2x) P/BV for Equitas. SKS is trading at 5x & its RoE is 25% - although I think SKS is clearly overvalued but at least the direct correlation between P/BV & RoE is clearly evidenced.

4. If we look back, is Bandhan able to justify its 2.9x P/BV after 7 months from its private placement in Aug15? Yes! It has made impressive progress in shoring up its deposit base.

5. So, the only question I have is whether Equitas will be able to withstand the initial overheads & the associated fall in profitability with the help of a quick ramp up of its deposit base or not. If ur answer is ‘yes’, go ahead & invest.

The NP for 9 months to Dec15 was, as mentioned by eagleye, 120.6cr which annualises to 160 Cr. Even if we take a conservative estimate of 145 Cr for the full year FY16, we get a P/BV of 1.95x. So, not much complaints about valuation really.

Ujjivan was recently priced at 2.1x but it is more diversified & has better RoE of 14% than Equitas.

Bandhan was priced at 2.9x but had much higher RoE of 28%. Bandhan operates in a very underbanked area (WB) & therefore it''s much easier for them to quickly expand than Equitas which is less diversified & has more than half of its business in a highly mature state (TN). So, there will be some initial hiccups in the near term for Equitas. RoE will plunge down to single digit post issue due to fresh equity of 720 Cr.

Having said that, there is no reason why it shouldn''t recover in medium term (2-3 yrs from now). I do believe in the concept of SFB which could finally deliver financial inclusion to a huge mass of unbanked Indians. Equitas should benefit from first mover advantage...it won the license when likes of SKS, IIFL etc failed. Functioning as a SFB, interest rate on its loans will come down materially, mitigating thereby the ''political risk'' which typically MFIs like SKS face due to high interest rates they charge.

So, overall some positives for medium to long term investors but let''s not get carried away & lose sight of the associated risks......let''s keep doubting the obvious till the last minute (3pm, 7th April is it?).....this will also help us prepare for the upcoming Ujjivan''s IPO.

As to the question whether it will fetch good flipping gains I am, as always, blind as a bat.

I am always like that cover all the bad things first keep doubting syndrome only invest after risk is less

any one can reply AVOID/ APPLY

I m neutral on this ipo.

As said earlier I do not like micro financing company model. It may be profitable but would lead to blood on its hands due to suicides of small middle class/ poor people. Would avoid this IPO. However, if subscription is good then would see if I should invest. Would wait till 1400 on last day.

What is the latest premium n application rate in ahmedabad

Teamlease return 20% first day and others 10% positive next day in market is negetive..so gmp.depend company,priceband,fandamental etc.

listing of health care very poor so equitas subscription must be low

If you that logic there are 2 more flop IPOs to list in the next 5 days, are you implying that Equitas GMP will completely vanish?

What is GMP of Equitas Holding Ltd.?
HCG poor listing.

Equitas Holding Me Kya Kare?

Gmp 11

eagleye ji apply/avoid this ipo

MSw seems part time merchant stooge .....

i am searching which stocks fii are buying and buy that stock

and where are you searching?

if fii selling more than they are allowed it means they will not buy at future they consider rs 110 as fair selling price so not much gain left

Interestingly FII cant bid in IPO. But will add post listing. Now price after listing will increase as they might want to hold stake.

Foreign ownership in small finance bank licence holder Equitas Holdings Ltd, which currently stands at 92.64%, will drop to near 35% following its initial public offering (IPO), two people in know of the matter said.

Twelve foreign investors propose to sell 132.24 million shares in the three-day public issue, the people said.

With foreign holding falling below the 49% limit by the Reserve Bank of India (RBI), foreign portfolio investors will be able to trade in the stock post listing, which will create liquidity on the counter.

“Logically it (selling of shares by existing shareholders in the issue) implies that foreign shareholding will foreign investors after listing and could have a positive impact on the stock price,” said one of the persons cited above, who did not want to be named.

RBI guidelines for the small finance banks mandate a foreign shareholding limit of 49%. At all times, at least 26% of the paid-up capital will have to be held by residents or domestic investors, said the central bank’s statutory guidelines for the small finance banks in November 2014.

As part of the IPO, six foreign investors will fully exit their holdings. They are Sequoia Capital India Investments III, Aavishkaar Goodwell India Microfinance Development Co. Ltd, Aquarius Investments Ltd, MVH SpA, Lumen Investment Holdings and WestBridge Ventures II Llc, as per information made available in the red herring prospectus.

Other foreign investors selling a part of their shares include World Bank arm International Finance Corp., Dutch development finance institution FMO and Helion Venture Partners Llc. Equitas’ founder P.N. Vasudevan, who owns 3.17% stake in the firm, will also sell a part of his holding, according to the RHP.

A red herring prospectus is an offer document approved by the market regulator Securities and Exchange Board of India (Sebi) that can be used for officially launching and marketing a public issue.

“There is demand among foreign investors and the share sale creates a lot of room for them,” said the second person who too did not want to be named.

The Chennai-based microfinance lender intends to raise nearly Rs.2,176 crore through the public issue that opens on 5 April. The issue will close on 7 April. The anchor book will open on 4 April. Equitas Holdings has a price band of Rs.109-110 per share, and will allot 197.7 million shares at the upper price band and 198.3 million shares at the lower band.

On 28 March, Mint reported that the share sale at the upper price band will value Equitas Holdings at price-to-book value (PBV) multiple of about 2.2 times. PBV multiple is a ratio used to value financial institutions.

Equitas Holdings will be valued at Rs.3,700 crore post its listing, the company said in a press conference on Tuesday. The company received approval for its IPO from Sebi on 29 December.

Equitas’ revenue increased 56% to Rs.755.9 crore in 2014-15 from Rs.483.5 crore in the previous year, data from the company’s IPO filings show. Last fiscal, the firm reported a profit of Rs.106.6 crore, an increase of 44% over the previous year’s profit of Rs.74.1 crore. The company disbursed fresh loans of Rs.3,606 crore in fiscal year 2015.

Another small-finance-bank licensee, Ujjivan Financial Services Ltd, also plans to tap the primary markets. Ujjivan filed its draft prospectus with Sebi on 31 December and received regulatory approval last month. The company is yet to finalize the launch date for its share sale.

If i go by the number eagle eye provided that post issue outstanding shares is 34 crores shares and this ofs is 20 crores plus which means FII r selling more then 51% FDI limit Which IMO is not a good sign why sell more then then suppose to sell to meet the regulation.

IMO this will adversely effect the issue market does not like things like this anyway if eagle eye if you forwarded the big question list of ur can u add why FII r selling more then regulator wants them to sell...

okay MS word this makes sense thank u for the explanation..... so after the OFS Fiis stake will come down regulated limit however with new issue it will fall further then the regulated limit.... BTW MS WORD u have good knowledge abt this issue which is nothing wrong but we get a lot of one timer company stooge misleading the forum.... and i hope u r not one of them... keep contributing do not disappear after the issue

"Its current foreign shareholding of 93 per cent will come down to 35 per cent after the public offer, according to PN Vasudevan, MD, Equitas Holdings."
Source:
http://www.thehindubusinessline.com/markets/stock-markets/equitas-2163cr-ipo-to-open-on-april-5/article8409983.ece

SO now gray mkt going down

i do not understand its good issue yet gmp not go up

Equitas
GMP 9.50 - 10.00
(Further Dropped)

Omg retail giyooooooooOo...
QH Jeso ho riyo hai....
Pehle premium acho
.....baad ma giri giioooo

Since starsipo n star ipo have been found to be same person the individual reverted back to another alias namely Rajiv Chops. Worthless comments of his not worth commenting on.