Ujivan Small Finance Bank (SFB) will raise up to Rs 6,000 crore in new equity from institutional investors within three to six months to raise the public float to 25% and support business growth.
The company told the BSE that the board has approved an equity issue of up to Rs 600 crore, including a premium through a qualifying institutional placement, subject to shareholder approval.
As of the end of December 2021, its capital adequacy ratio was 19.1% and its Tier 1 capital was 17.7%.
Ittira Davis, managing director and chief executive officer of Ujjivan SFB, said regulation requires listed entities to have a 25% public shareholding. Ujivan is now around 18%. Therefore, the bank must purchase an additional 7% of the bank’s public shares. This will take place prior to the reverse merger of the originating entity and the bank.
The SFBs are publicly offered and listed on exchanges in the third quarter of fiscal 2020 in compliance with RBI regulations which require all SFBs to be listed as separate entities within three years of commencing business.
In addition to meeting regulatory requirements, the fresh capital will help grow the business over the next year or so. He said there had been little growth in the past two years after the Covid-19 pandemic hit economic activity.
As for returning to profitability after a timed loss in Q3 FY22, Davies said the way things were pointing (loan increases) the bank should be able to achieve that (reporting profits) in Q4. The loan book established in the third quarter will begin to provide earnings (interest income) in the fourth quarter. The January 2022 approach is showing good traction, and if February and March move in this direction, a turnaround will be achieved.
It narrowed its loss for the third quarter of fiscal 2022 to Rs 33.83 crore from Rs 278.33 crore in the quarter ended December 2020 (Q3Fy21) and Rs 273.39 crore in Q2Fy22.
Its total advances stood at Rs 16,463 crore in December 2021, up 21% year-on-year (Y-o-Y) and 13% quarter-on-quarter (Q-o-Q). Expenses in the third quarter were Rs 4,809 crore, up 120% year-on-year and 54% quarter-on-quarter.
The bank’s net NPA stood at 1.67% of net advances at the end of December 2021, up from 0.05% a year ago, but down from 3.29% in the September 2021 quarter.
Complete News Source : Business Standard
