India: IPO-bound Ujjivan SFB seeks more time to reduce promoter shareholding

Samit Ghosh, founder and managing director, Ujjivan Financial Services. Photo: Mint

Ujjivan Small Finance Bank, which is set to launch its initial public offering (IPO) next week, is seeking an extension from the Reserve Bank of India to bring down its promoter shareholding, bank officials said. The bank will start discussions with the regulator once the listing is over.

“Within five years, we have to reduce the shareholding to 40%. We will take it up with RBI. If they still insist that we have to reduce to 40% within five years, then we will look at OFS (offer for sale) or acquisition one year after this IPO,” Samit Ghosh, managing director & chief executive officer, told reporters.

Ujjivan Small Finance Bank has fixed a price band of 36-37 per share for its IPO opening on 2 December. The proposed issue will see promoter shareholding falling to 85% post the IPO. It will comprise a fresh issue of equity shares aggregating up to 750 crore. A portion of the issue aggregating up to 75 crore is set apart for eligible Ujjivan Financial Services shareholders, on a proportionate basis.

“We don’t want to acquire just to build our book. We are looking at something which brings new talent, new way of doing things like a tech company or a specialised NBFC, which does business where we are not doing business,” he added.

Ujjivan SFB had been exploring a reverse merger of its parent company with itself before the IPO. The bank’s parent Ujjivan Financial Services Ltd went public in 2016, after receiving an in-principle licence from RBI to start a small finance bank. The RBI later asked the promoter holding company to list its small finance bank unit to comply with its norms, which mandate that a small finance bank with a net worth of more than 500 crore must be listed within three years of the launch of operations.

“Within RBI guidelines, the reverse merger or allowing the promoter to reduce the shareholding to zero, is already a part of the clarification. So, that still stands. What we were asking for is not wait five years and do it earlier. That’s been turned down. After five years, it’s still possible, subject to RBI’s comfort with us in the sense they will look at annual audit or our compliance records,” he said.

Ujjivan SFB has a gross loan book size of 12,863.60 crore, with microfinance loans constituting 79.2% of the total loan book and MSME loans accounting for 6.5%.

This article was first published in livemint.com

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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).

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  • 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.