India: Singapore GIC-backed Bandhan Bank preparing to launch IPO

Visual from Bandhan Bank website

Bandhan Bank Ltd, one of the two entities to receive a universal banking licence in 2015 and the only microfinance institution to do so, has started preparing for an initial public offering (IPO), three people aware of the development said.

The Reserve Bank of India (RBI) in 2014 gave an in principle approval to infrastructure financier IDFC Ltd and microlender Bandhan Financial Services Pvt. Ltd to start new banks, making them only the third set of private sector lenders to be given such licences in two decades. Before that, banking licences were issued a decade earlier, when it awarded licences to Kotak Mahindra Bank Ltd and Yes Bank Ltd in 2004.

“Bandhan Bank has started the process to hire investment banks for its proposed IPO. They have had preliminary meetings and are expected to have formal pitches in the coming week or so,” said one of the three people cited above requesting anonymity, as he is not authorized to speak to reporters.

The IPO is expected to be a mix of primary and secondary share sale, according to the second person. “The IPO will help the bank comply with RBI’s norms on listing of banks as well as help it strengthen its capital base,” he added, also requesting anonymity.

The discussions with the investment banks are at an early stage, and the size of the IPO is yet to be crystallized, he added.

ET Now was the first to report the development on Tuesday.

“As per RBI norms, we are in process to select investment banks. Not yet decided amount and time (of IPO),” Chandra Shekhar Ghosh, managing director and chief executive of Bandhan Bank, said in a text message.

Bandhan Bank’s plans to go public come at a time when investors have reaped heavy gains from the initial share sale of RBL Bank Ltd and the share sales of small finance banks—AU Small Finance Bank, Ujjivan Financial Services Ltd and Equitas Holdings Ltd.

Shares of Au Small Finance Bank, which closed its Rs1,900 crore IPO earlier in June, have since gained 47.5% from its issue price of Rs358 per share.

RBL Bank, which went public in August 2016, has seen its shares more than double from its issue price of Rs225 per share. Shares of Ujjivan and Equitas have gained 44.7% and 41.5%, respectively since their listings last year.

So far this year, 15 companies have raised Rs12,589.94 crore through the IPO route, data from primary market tracker Prime Database shows. In 2015 and 2016, a total of 47 companies raised Rs40,107.92 crore, data shows.

Kolkata-based Bandhan Bank has a network of 840 branches and 2,444 doorstep service centres in 33 states and union territories.

Announcing its quarterly results last month, the bank said that its deposits have expanded 51% to Rs22,439 crore at the end of June. Cost of deposits has over the past year come down from 8.22% to 7.04%. The bank’s total outstanding loans stood at Rs21,389 crore as of the end of June.

Bandhan Bank counts Singapore’s sovereign wealth fund GIC, world bank arm International Finance Corp and Small Industries Development Bank of India as its investors.

This article was first published on Livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.