Fedbank Financial Services has announced plans to raise ₹1,092 crore through an initial public offering (IPO). The offering is set to open for subscription on November 22 and close on November 24, with the price band fixed at ₹133-140 per equity share.
During the IPO press conference, Managing Director and Chief Executive Officer Anil Kothuri expressed confidence that negative market sentiment would not impact the offering. He also noted that the non-banking financial company (NBFC) plans to utilize the proceeds from the fresh issue to bolster its Tier-I capital base to meet future capital requirements.
The IPO comprises a fresh issue aggregating up to ₹600 crore and an offer for sale by promoter Federal Bank, and selling shareholder of True North Fund VI LLP I. Fedbank Financial Services is being managed by book running lead managers ICICI Securities, BNP Paribas, Equirus Capital Private, and JM Financial.
As a retail focused NBFC promoted by The Federal Bank, Fedbank Financial Services is one of the five private bank promoted NBFCs in the country. The company has 584 branches and is focused on MSME loans, gold loan, and more. Its asset under management (AUM) grew at a compound annual growth rate (CAGR) of 33% between FY20 and FY23. Its total revenues and profits also grew significantly during the same period.
However, there are certain risk factors associated with Fedbank Financial Services. The company has a concentration of loans in certain regions and to specific borrower profiles, which could have an adverse effect on its business in the event of economic hardships. Additionally, operational risks, capital adequacy, and legal proceedings are also areas of concern.
Despite these risks, Fedbank Financial Services remains optimistic about the future as it prepares to open its IPO for subscription later this month.
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