Fedfina Filed Draft Papers with SEBI

Federal Bank Ltd arm Fedbank Financial Services Ltd (FedFina) has filed draft papers with the Securities Exchange Board of India to raise funds via an initial public offering. The IPO consists of a fresh issue of Rs 900 crore and an offer for sale (OFS) of up to 45.71 million shares by its existing shareholders and promoters. The OFS comprises up to 16.50 million shares by Federal Bank and up to 29.22 million shares by True North Fund VI LLP. Currently, Federal Bank holds a 73.31 percent stake while True North Fund VI LLP has a 25.76 percent stake in FedFina. ICICI Securities Limited, Equirus Capital Private Limited, IIFL Securities Limited and JM Financial Ltd are the lead managers to the issue.

Federal Bank says it will continue to own more than 51 percent of the outstanding share capital post the completion of this offering. The lender believes that its long operating history, track record, management expertise and the ‘Federal Bank’ brand have enabled it to establish a competitive position in the markets it serves and create trust among its customers, lenders, regulators and investors. The proceeds from the issue will be used for augmenting the company’s Tier–I capital base to meet its future capital requirements, arising out of the growth of business and assets.  As of September 30, its capital to risk asset ratio (CRAR) was 25.63 percent, with Tier I capital comprising 20.25 percent. FedFina is the fastest growing gold loan NBFC in India. Currently, it is present in 15 states and union territories across India with a strong presence in Southern and Western regions. As of September 2021, it covered 136 districts in 15 states and union territories in India through 463 branches and 86.25 percent of its total loan assets are secured against tangible assets, namely gold or customer’s property. Its installment loans to MSMEs and ESEIs had an AUM of Rs 2,933.83 crore and gold loans had an AUM of Rs 2,132.92 crore. As of September, its gross and net NPAs were at 2.2 percent and 1.6 percent while in FY21 it was at 1.01 percent and 0.71 percent respectively.  Its total AUM was at Rs 5,246.74 crore as of September 2021 against Rs 4,862.43 crore in FY21.

For FY21, the lender reported a net interest income (NII) of Rs 344.92 crore against Rs 220.53 crore a year ago. Net profit for the year stood at Rs 61.68 crore versus Rs 39.14 crore last year. Gross loan book for the year stood at Rs 4,627.04 crore versus Rs 3,720.25 crore last year. As of September 2021, its NII stood at Rs 216.40 crore while net profit stood at Rs 33.57 crore.