Bandhan Bank IPO Opens on March 15, Should you Subscribe?

Bandhan Bank Ltd, the private sector lender, has received the approval from the Securities and Exchange Board of India (SEBI) to raise an approximate amount of over Rs. 2,500 crore through an initial public offering (IPO). The Bandhan Bank IPO opens on March 15th, which will be the biggest initial share sale by an Indian bank. The subscription will close on 19^th March.

Bandhan Bank is the first entity in India, where a micro-finance entity transformed into a universal bank. In April 2014, the Reserve Bank of India had granted banking license to Bandhan Financial Services and IDFC.

Bandhan Bank IPO comprises of the fresh issue of up to 97,663,910 equity shares and an offer for sale of up to 14,050,780 scrips by International Finance Corp. (IFC) and up to 7,565,804 shares by IFC FIG Investment Co.

Moreover, the book-running lead managers to the issue are Kotak Mahindra Capital Co. Ltd, Axis Capital Ltd, Goldman Sachs (India) Securities Pvt. Ltd, JM Financial Institutional Securities and JP Morgan India Pvt. Ltd.

Bank’s Strong Networks

Bandhan Bank has a network of 2,546 doorstep service centres (DSCs) and 9.47 million micro loan customers. The bank has strong very presence and hold in microfinance. Further, the bank has 864 bank branches and 386 ATMs serving over 1.87 million general banking customers. The banks’ distribution network is strong in East and Northeast India, with West Bengal, Assam and Bihar.

Bandhan Bank’s Competitive Advantage

• The bank’s Operating Model is focused on catering to underbanked and underpenetrated markets (microfinance)
• The bank has showed consistent track record of growing a quality Asset and Liability franchise
• Bandhan Bank has an extensive and low Cost Distribution Network
• The bank provides accessible, simple, cost-effective and innovative financial solutions
• The bank has strong capital base
• The bank maintains focus on micro lending while expanding further into other retail and SME lending

Purpose of the issue

The object of the fresh issue is to enhance Bank’s Tier-I capital base to meet Bank’s future capital requirements. Additionally, the selling shareholders will be entitled to the respective portion of the proceeds of the Offer for Sale.

Other IPO Details

• Price Band:INR 370-375 Per Equity Share:
• Face Value: INR 10 per share
• Minimum Order Quantity: 40
• Listing will at: BSE,NSE

Bandhan Bank IPO Grey Market Report

As on 8th March.2018 at 14.00 IST, Bandhan Bank IPO GMP was INR 27/29

There is continuous fall in the market therefore; most of the grey market traders are not much interested in committing any deals in GMP.

Should you subscribe?

During the three quarters ending December 2017, the bank has reported financials with a net profit of Rs 960 crore and about Rs 1,100 crore in the full year to March 2017. Bandhan Bank also counts Singapore state investor GIC among its investors. Meanwhile, its shareholders International Finance Corp, part of the World Bank Group, and IFC FIG will sell 21.6 million shares in the IPO.

There is a strong growth in the profit, revenue and the assets of the bank from the last three years. The long term investors should definitely subscribe to this issue.