Fedbank Financial Services IPO Oversubscribed 2.2 Times

Fedbank Financial Services’ initial public offering (IPO) witnessed robust demand, with the subscription reaching 2.2 times the shares on offer by Friday evening.

Subscription Details

The ₹1,092 crore IPO saw strong interest across investor categories. The qualified institutional buyer (QIB) portion was subscribed 3.5 times, reflecting institutional investor confidence. The non-institutional and retail investor segments were also well-received, being subscribed 1.4 times and 1.8 times, respectively.

Anchor Investors’ Participation

Prior to the public offering, the NBFC raised ₹324.67 crore from 22 anchor investors. Notable investors such as HDFC Mutual Fund, HDFC Life Insurance, SBI Life Insurance, Nippon Life India, Societe Generale, and Goldman Sachs (Singapore) PTE contributed to the anchor book.

IPO Details

The IPO was priced in the range of ₹133 to ₹140 per equity share. It comprised a fresh issue amounting to ₹600 crore and an offer for sale by promoter Federal Bank and selling shareholder True North Fund VI LLP I.

Utilization of Proceeds

Fedbank Financial Services plans to utilize the net proceeds from the fresh issue to bolster its Tier – I capital base, ensuring it meets future capital requirements arising from business and asset growth.

Business Focus and Performance

The NBFC has a retail-focused approach and is promoted by The Federal Bank. With 584 branches, it concentrates on MSME loans, gold loans, and other financial services. Notably, it is among the five private bank-promoted NBFCs in India.

As of March 31, 2023, the company showcased impressive growth metrics. It had the third fastest assets under management (AUM) growth among its peers, with AUMs growing at a 33% compounded annual growth rate (CAGR) between FY20 and FY23, reaching ₹94.34 crore by June 2023.

Furthermore, its total revenues surged by 37% and 26% in FY23 and FY22, respectively, with profits also witnessing significant growth during the same periods at 74% and 67%. As of June 30, 2023, its Gross non-performing assets (NPA) stood at ₹189 crore, with Net NPA at ₹147 crore, indicating a healthy financial position.