Fedbank Financial Services IPO: The initial public offering of Fedbank Financial Services, a subsidiary of south India-based Federal Bank, continues to witness a muted response from investors. On the second day of bidding also, the Rs 1,092-crore IPO was not fully subscribed. As per NSE data till 05:00 pm, the IPO has been subscribed 90 per cent or 0.9 times, receiving bids for 5,03,90,152 shares as against 5,59,23,660 shares on offer.
The category for non-institutional investors was subscribed 52 per cent, while the qualified institutional buyers (QIB) category received 56 per cent subscription. However, the portion for retail individual investors (RIIs) has been oversubscribed receiving 1.25 times subscription.
The IPO allotment will take place on November 30, while the share listing might take place on December 5.
Fedbank Financial Services IPO GMP
According to market observers, unlisted shares of Fedbank Financial Services were trading Rs 2 higher in the grey market as compared with its issue price. The Rs 2 grey market premium or GMP means the grey market is expecting muted or just 1.43 per cent listing gain from the public issue. The GMP is based on market sentiments and keeps changing. The GMP was Rs 5 on Wednesday.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
The price band of the IPO has been fixed at Rs 133-140 per share.
Fedbank Financial Services IPO: What Analysts Say
Giving ‘Subscribe For Long Term’ rating to the IPO, brokerage Anand Rathi in a note said, “At the upper price band company is valued at a P/BV of 2.5X with a market cap of Rs 51,651 million post-issue of equity shares. We believe that the issue is fairly priced and recommend a ‘Subscribe – Long Term’ rating to the IPO.”
Another brokerage StoxBox also recommended the IPO. Its research analyst Shreyansh Shah said, “The NBFC has an effective underwriting capability due to its experienced underwriting team and established processes which is likely to keep asset quality issues at bay going forward. With most of the positives seemingly priced in, we advise investors to subscribe to the issue for the benefit of listing gains.”
Fedbank Financial Services has posted the third-fastest AUM growth amongst NBFC peer set in India, with a three-year CAGR of 33 per cent during the FY20-23 period.
Fedbank Financial Services IPO: Price, Lot Size
The issue is a combination of a fresh issue of 4.29 crore shares aggregating to Rs 600.77 crore and an offer for sale (OFS) of 3.52 crore shares to the tune of Rs 492.26 crore.
The minimum lot size for an application is 107 shares. The minimum amount of investment required by retail investors is Rs 14,980. The minimum lot size investment for NII is 14 lots (1,498 shares), amounting to Rs 2,09,720, and for NII, it is 67 lots (7,169 shares), amounting to Rs 10,03,660.
Under the OFS, Federal Bank will offload 1.65 crore shares, and True North Fund VI LLP will divest 5.38 crore shares. Fedfina proposes to utilise the net proceeds from the fresh issue towards augmenting the Tier-I capital base to meet its future capital requirements and offer expenses.
Among the investors that participated in the anchor book include — Goldman Sachs (Singapore) Pte, Copthall Mauritius Investment Ltd, Integrated Core Strategies (Asia) Pte, Citigroup Global Markets Mauritius, Bandhan Mutual Fund (MF), HDFC MF and Edelweiss MF. SBI Life Insurance Company, HDFC Life Insurance Company, Kotak Mahindra Life Insurance Company, Tata AIA Life Insurance Company and Bajaj Allianz Life Insurance Company are among other investors.
ICICI Securities, BNP Paribas, Equirus Capital and JM Financial are the book-running lead managers of the Fedbank Financial Services IPO.
On Monday, Fedbank Financial Services raised Rs 330 crore in a pre-IPO placement round.
SBI Life Insurance, Star Union Dai-chi, Yasya Investments, Nuvama Crossover III, and Nuvama Crossover IIIA are some of the key investors in the round. The pre-IPO placement comprised 2,35,71,428 equity shares at the upper end of the price band of Rs 140 apiece.
(The story has been updated with the latest data)
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