Ujjivan Small Finance Bank Shares Rise 50% On First Day Of Trading
Samit Ghosh, managing director and chief executive officer of Ujjivan Small Finance Bank. (Photographer: Vivek Vijay Amare/BloombergQuint)

Ujjivan Small Finance Bank Shares Rise 50% On First Day Of Trading

WATCH | Ujjivan Small Finance Bank On Listing And The Way Ahead

Shares of Ujjivan Small Finance Bank Ltd., backed by investors including Aberdeen Standard Investments and Monetary Authority of Singapore, rose as much as 70 percent after the lender raised funds in the most-subscribed initial public offering of 2019.

The stock hit a peak of Rs 62.80 apiece, 69.73 percent higher than the issue price of Rs 37 per share on the National Stock Exchange, before ending the day 49.45 percent higher at Rs 55.30 apiece.

“The (microfinance) sector is under-penetrated and offers big scope for growth,” said Mona Khetan, Mumbai-based analyst at Reliance Securities Ltd. The stock is “fairly priced” after the listing gains, she said.

The Dec. 2-4 Ujjivan Small Finance Bank IPO was subscribed 166 times as it received bids for 20.53 billion shares against an issue size of 124 million shares.

The stellar listing extends the streak of robust returns logged by new entrants this year. Indian Railway Catering & Tourism Corp. Ltd.’s initial share sale in October attracted bids for 112 times the offer size and the stock went on list at double the sale price. Last week, CSB Bank Ltd., backed by billionaire Prem Watsa, had the best debut for an Indian lender since 2006.

An initial share sale by the lending arm of Ujjivan Financial Services Ltd. was necessitated to comply with the Reserve Bank of India’s licensing and listing norms. The bank has to pare its promoter shareholding to 40 percent within five years of operations—by February 2022.

“The promoter shareholding will come down to 85 percent post the IPO,” Samit Ghosh, managing director and chief executive officer of Ujjivan Small Finance Bank, had told BloombergQuint in an interview. “We want to consider a reverse merger route (to further bring down stake). If it (RBI) doesn’t approve the reverse merger, we have the option of going for an offer for sale.”

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The mass-market small finance bank caters to unserved and underserved segments, and is present in 24 states and union territories, with 552 banking outlets and 441 automated teller machines. The bank started as a microfinance lender but has diversified by entering the non-microfinance business.

With inputs from Bloomberg.

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