Fino Payments Bank Sets IPO Price Band At Rs 560-577 Apiece

Fino Payments Bank Ltd. will sell shares at Rs 560-577 apiece in its three-day initial public offering.

The maiden float will comprise a fresh issue of equity shares worth Rs 300 crore and an offer-for-sale of 1.56 crore shares by its holding company Fino Paytech Ltd., the payments bank said in a public announcement.

Fino Paytech holds 7.8 crore shares, or 100% stake, in Fino Payments Bank. Marquee investors, including ICICI Bank Ltd., Blackstone, Life Insurance Corporation of India, Intel Capital, International Finance Corporation and Bharat Petroleum Corporation Ltd., hold stakes in Fino Paytech. Union Bank of India Ltd. and Indian Bank Ltd. also own stakes in the holding company.

The payments bank will raise Rs 1,200 crore at the upper end of the price band. The funds are expected to bolster Fino Payments Bank’s tier-1 capital ratio to meet future growth needs, it had said in its draft red herring prospectus. As on March 31, the bank’s capital adequacy ratio was at 56.3% compared with the regulatory minimum of 15%.

“We are not in the credit business per se. So our capital adequacy is always going to be higher than the 20% you see in an asset-based bank,” Rishi Gupta, managing director and chief executive officer at Fino Payments Bank, told BloombergQuint in an interview.

The bank had originally planned to raise Rs 1,300 crore through the IPO, though the limit was set at Rs 1,200 crore as it wanted to “leave something for investors on the table in the future”.

Its focus is to build a digital bank for unserved and underserved customers in India. The proceeds from the IPO will be largely utilised toward developing its technology infrastructure, marketing and advertising, Gupta said.

Fino Payments Bank offers deposits, remittance and payments services through an asset-lite business model. It also provides credit and investment products through third-party distribution. The bank had reported a net profit of Rs 20 crore for the year ended March 2021 compared with a net loss of Rs 32 crore a year before.

“During the first quarter this year, compared to last year, there is a growth of nearly 36% in our top line. There is nearly a 50% rise in transaction volumes as well,” Gupta said.

The company has been working with banks and non-bank lenders to provide gold loans to its customer base over the last two years. It has also started providing merchant loans through a tie-up with a non-bank lender, Gupta said. Fino Payments Bank has started a pilot programme for providing consumer loans through similar partnerships.

It is also awaiting approvals to provide mutual fund services as well as purchase and sale of gold on its digital platforms, Gupta said.

Fino Payments Bank will look at a reverse merger with its holding company after June 2022, as the Reserve Bank of India has allowed such transactions, Gupta said. The bank will also look at converting itself into a small finance bank at an opportune time.

The IPO is set to open on Oct. 29 and will close on Nov. 2. Not less than 75% of the issue is reserved for qualified institutional buyers, not more than 10% for retail investors and not more than 15% for non-institutional investors.

Axis Capital, CLSA India, ICICI Securities and Nomura Financial are bankers to the issue.

Watch the full interview here: