IDFC First, others may pare stake in Suryoday SFB

IDFC First Bank and a few other investors would be looking to lower their ownership in Suryoday Small Finance Bank, which is in the final laps of making an application for its initial public offer (IPO).

The proposed IPO would consist of a primary issue and an offer for sale (OFS), people familiar with the matter said. Some of the existing investors would take the OFS route for partly offloading their stakes, they said.

International Finance Corporation (IFC), DWM (International) Mauritius, Gaja Capital, Lok Capital and HDFC Life Insurance Company are some of the prominent shareholders in Suryoday, which had Rs 3,700 crore of assets under management as of March.

The size of the IPO is likely to be in the range of Rs 550-600 crore while about 40% would be reserved for OFS. The company was earlier looking to raise about Rs 1,400 crore but it pruned the proposed size because of the current challenging market conditions.

IDFC First, which came in as investor in the bank in 2017-18, now holds about 2.87%. Among other institutional investors, DWM and IFC hold more than 5%.

Suryoday refused to comment on the matter. IDFC First Bank did not respond to ET’s queries.

The small finance bank has appointed ICICI Securities and Axis Capital among its investment bankers. The bank has to get itself listed by March 2021 as per the licensing agreement with the Reserve Bank of India (RBI).

Individual investment bankers could not be contacted immediately.

“The bank will soon file the offer document to the Securities Exchange Board of India as editing of the document is currently going on,” said one of the persons cited above. The formal launch of the IPO is likely before December.

“Sales proceeds could well add to IDFC First Bank’s core banking business,” the person said.

The private sector new generation bank reported a net profit of Rs 94 crore for the June quarter compared with a loss of Rs 617 crore in the year ago period.

Despite the sluggish economic situation, the IPO market has seen some blockbuster deals lately, with Happiest Minds and Route Mobile drawing record subscriptions against shares offered for sale.