The Rs 1092 crore initial public offering (IPO) of Fedbank Financial Services was fully subscribed on the third and the last day of the bidding process on Friday. The issue was booked 90% on day two.
At 11:12 am, the issue attracted bids for 5,68,20,424 shares, or 1.02 times against the issue size of 5,59,23,660 shares. The retail portion of the issue was subscribed 1.42 times, and the non-institutional category’s subscription rate stood at 0.66 times. The allocation for qualified institutional bidders was booked 0.56 times.
In the grey market, the company’s shares are trading with a premium of Rs 5.
Fedbank Financial is one among five private bank promoted NBFCs in India. It focuses on catering to the MSMEs and the emerging self-employed individuals sector.
The IPO comprises fresh equity issue worth Rs 600 crore along with an OFS of 3.51 crore equity shares. Under the OFS, parent Federal Bank will offload 54.7 lakh shares and True North Fund VI LLP will sell 2.96 crore shares.
The price band of this public issue is fixed at Rs 133-140, and at the upper end, the company plans to raise Rs 1,092 crore.
About 50% of the offer is reserved for qualified institutional buyers, 35% for retail investors and 15% for non-institutional investors.
“At a higher price band of Rs 140, FFSL’s issue is priced at a P/BV of 2.6x based on post-issue Adj. BVPS, representing a discount compared to its peer group’s average P/BV of 3.45x. Despite the apparent discount, key financial ratios fall below the industry average, diminishing the overall attractiveness of the investment,” said Choice Broking.
“Going forward, potential interventions by RBI in the non-banking financial sector may impact FFSL’s business, leading to adverse effects on its financial ratios, and thus we assign a “Subscribe with Caution” rating for the issue,” Choice Broking said.
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