Utkarsh Small Finance Bank IPO to open on July 12, 2023, Sets Price Band at Rs 23 to Rs 25 per Equity Share

 by Priya Jadhav 

MUMBAI, 10 JULY, 2023 : Varanasi-based Utkarsh Small Finance Bank Limited (“Bank”) proposes to open its initial public offering comprising a fresh issue of such number of Equity Shares aggregating up to ₹5,000 million (“Issue”) on Wednesday, July 12, 2023. Bid/ Issue Closing Date will be Friday, July 14, 2023. The Anchor Investor Bidding Date is one Working Day prior to the Bid/Issue Opening Date, that is, Tuesday, July 11, 2023. 

Bank recorded the third fastest Gross Loan Portfolio growth between Fiscal 2019 and Fiscal 2023 among small finance banks (“SFB”). The Bank has fixed the price band at ₹23 to ₹25 per Equity Share for the Issue. Bids can be made for a minimum of 600 Equity Shares and in multiples of 600 Equity Shares thereafter. 

The Bank is promoted by Utkarsh CoreInvest Limited, which commenced its operations as a NBFC in Fiscal 2010 and focused on providing microfinance to unserved and underserved segments particularly in the states of Uttar Pradesh and Bihar. Utkarsh CoreInvest Limited received the RBI In-Principle Approval on October 7, 2015, to establish an SFB, following which it incorporated Utkarsh Small Finance Bank Limited as a wholly-owned subsidiary on April 30, 2016. Subsequent to the Bank obtaining the RBI Licence on November 25, 2016, to establish and carry-on business as an SFB, Utkarsh CoreInvest Limited transferred its business of providing microfinance, as a going concern to the Bank, which commenced its operations from January 23, 2017.

In case of any revision to the Price Band, the Bid/Issue Period will be extended by at least three additional Working Days following such revision of the Price Band, provided that the Bid/Issue Period shall not exceed 10 Working Days. In cases of force majeure, banking strike or similar circumstances, the Bank, in consultation with the BRLMs may, for reasons to be recorded in writing, extend the Bid/Issue Period for a minimum of three Working Days, subject to the Bid/Issue Period not exceeding 10 Working Days. Any revision in the Price Band and the revised Bid/Issue Period, if applicable, will be widely disseminated by notification to the Stock Exchanges by issuing a public notice, and also by indicating the change on the respective websites of the BRLMs and at the terminals of the Syndicate Member and by intimation to the Self Certified Syndicate Banks, other Designated Intermediaries and the Sponsor Banks, as applicable. 

The Issue is being made in terms of Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957, as amended, (the “SCRR”) read with Regulation 31 of the SEBI ICDR Regulations. The Issue is being made through the Book Building Process, in compliance with Regulation 6(2) of the SEBI ICDR Regulations, where not less than 75% of the Net Issue will be Allotted on a proportionate basis to Qualified Institutional Buyers (“QIBs”) (the “QIB Portion”), provided that the Bank may, in consultation with the BRLMs, allocate up to 60% of the QIB Portion to Anchor Investors, on a discretionary basis (the “Anchor Investor Portion”), of which one-third shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the price at which Equity Shares are allocated to Anchor Investors. Further, 5% of the QIB Portion (excluding the Anchor Investor Portion) (“Net QIB Portion”) shall be available for allocation on a proportionate basis to Mutual Funds only and the remainder of the Net QIB Portion shall be available for allocation on a proportionate basis to all QIBs (other than Anchor Investors), including Mutual Funds, subject to valid Bids being received at or above the Issue Price. However, if the aggregate demand from Mutual Funds is less than 5% of the Net QIB Portion, the balance Equity Shares available for allocation in the Mutual Fund Portion will be added to the remaining Net QIB Portion for proportionate allocation to QIBs. If at least 75% of the Net Issue cannot be Allotted to QIBs, then the entire application money will be refunded forthwith. 

Further, not more than 15% of the Net Issue shall be available for allocation to Non-Institutional Bidders of which one-third of the Non-Institutional Portion shall be available for allocation to Bidders with an application size of more than ₹200,000 and up to ₹1,000,000 and two-thirds of the Non-Institutional Portion shall be available for allocation to Bidders with an application size of more than ₹1,000,000 provided that under-subscription in either of these two sub-categories of Non-Institutional Portion may be allocated to Bidders in the other sub-category of Non-Institutional Portion in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Issue Price. Further, not more than 10% of the Net Issue shall be available for allocation to Retail Individual Bidders, in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Issue Price. Further, Equity Shares will be allocated on a proportionate basis to Eligible Employees applying under the Employee Reservation Portion, subject to valid Bids received from them being at or above the Issue Price. All Bidders (other than Anchor Investors) shall mandatorily participate in this Issue through the Application Supported by Block Amount (“ASBA”) process and shall provide details of their respective bank account (including UPI ID for UPI Bidders (as defined below)) in which the Bid Amount will be blocked by the Self-Certified Syndicate Banks (“SCSBs”) or under the UPI Mechanism, as applicable. Anchor Investors are not permitted to participate in the Anchor Investor Portion through the ASBA process. For details, see “Issue Procedure” beginning on page 417 of the RHP.

The Equity Shares offered through the red herring prospectus dated July 6, 2023 (“Red Herring Prospectus” or “RHP”) are proposed to be listed on both BSE Limited (“BSE”) and National Stock Exchange of India Limited (“NSE”, together with BSE, the “Stock Exchanges”).

ICICI Securities Limited and Kotak Mahindra Capital Company Limited are the book running lead managers (“BRLMs”), while KFin Technologies Limited is the Registrar to the Issue.