Ujjivan Small Finance Bank is planning to dilute promoter stake in the bank by 10 to 15 per cent. This would include selling 10 per cent equity in its planned initial public offering (IPO) , besides employee stock options and an employee stock purchase scheme.

“The total stake dilution will be between 10 per cent and 15 per cent, taking the promoter shareholding down to about 85 per cent,” sources close to the development told BusinessLine .

Ujjivan Financial Services (UFS) is the holding company and promoter of its 100 per cent subsidiary, Ujjivan SFB.

The SFB, which filed its draft red herring prospectus with SEBI last week, is keen to list by November, but could do a re-think if market conditions remain volatile.

Under RBI norms, SFBs have to list within three years of operations and the promoter shareholding should be lowered to 40 per cent in five years. Ujjivan SFB has till January 2020 to meet the listing deadline.

Sources said the bank has also been in talks with the RBI to go for a reverse merger after five years, which would, in effect, bring down the promoter stake to zero. “RBI has indicated that the bank should approach them at the end of five years, but it seemed amenable to the plan,” the source added.

According to the DRHP, the bank seeks to raise Rs 1,200 crore, including reservation of equity shares of up to Rs 120 crore. The shares would be offered at a face value of Rs 10 each.

Meanwhile, Nitin Chugh is understood to have begun work at Ujjivan SFB and will take over as the Managing Director and CEO after the current incumbent, Samit Ghosh, retires at the end of November.

“Chugh has already joined and is working with Ghosh to understand the functioning of the bank. He will take charge from December,” another person close to the development said.

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