Proceeds from the proposed initial public offering (IPO) of Fincare Small Finance Bank (FSFB) will strengthen its capital adequacy ratio from about 20 per cent as of March-end 2023 to about 23–24 per cent, according to the bank’s management.

The bank plans to raise funds via IPO through the issue of equity shares of face value ₹10 each, comprising a fresh issue aggregating up to ₹625 crore and an offer for sale (OFS) aggregating up to 1.70 crore equity shares by promoter and investor-selling shareholders.

The bank proposes to utilise the net proceeds of the fresh issue towards the augmentation of the bank’s Tier-I capital base to meet its future capital requirements, per the bank’s DRHP.

“As a bank, we have been in existence for five and a-half years. Prior to our conversion into a bank, we operated as a non-banking finance company focused on the microfinance space for 13 years.

“We are listing in compliance with regulatory requirements. The bank also needs growth capital,” said Rajeev Yadav, MD and CEO.

As per regulatory guidelines, SFBs are required to list within three years of their net worth reaching ₹500 crore.

Proceeds from the primary issuance coupled with internal accruals will take care of the bank’s capital requirements for the next two years, according to Keyur Doshi, CFO.

The OFS comprises up to 1.49 crore equity shares by Fincare Business Services Ltd. and the balance by investor-selling shareholders such as Wagner, True North Fund V LLP, Indium IV (Mauritius) Holdings, Omega TC Holdings PTE. Ltd., Leapfrog Rural Inclusion (India) Ltd., Kotak Mahindra Life Insurance Company, and Edelweiss Tokio Life Insurance Company, among others.