Fedfina IPO Aims Rs 1.400 Crore Raise by 2023 End
Fedfina, the Non-Banking Finance Company (NBFC) division of Federal Bank, plans to pursue an Initial Public Offering (IPO) with the goal of generating up to Rs 1,400 crore by the end of 2023. This action follows the re-filing of its Draught Red Herring Prospectus since the initial effort was hampered by choppy market circumstances.
Shyam Srinivasan, Managing Director and Chief Executive of Federal Bank revealed to PTI that Fedfina intends to conduct the IPO sometime in 2023 with the goal of raising money in the region of Rs 1,200-1,400 crore. With sufficient cash in place to continue its expansion through early 2024, the NBFC arm’s growth trajectory seems optimistic.
The issuance is anticipated to occur within the next 90-100 days, according to Srinivasan, who also said that the Securities and Exchange Board of India (SEBI) will analyse the paperwork.
The main elements of the IPO are an offer-for-sale part and a new issuance to raise up to Rs 750 crore. Federal Bank intends to sell 1.64 crore shares through the offer for sale, but private equity company True North wants to sell 5.38 crore shares. Currently, the private sector bank owns 74% of the NBFC division.
According to Srinivasan’s projection, these four lending sectors would increase to a combined total of Rs 40,000 crore by 2027 from their current contribution of Rs 8,000 crore to a loan book of approximately Rs 1.8 lakh crore. Within four years, the size of the loan book is anticipated to double due to the anticipated 18 percent annual growth.
Concerning unsecured lending, Srinivasan made clear that the bank’s exposure to such products continues to be minimal. The bank has made the decision to limit exposure to unsecured loans at 10% of the entire book despite having aggressive development objectives.
According to Srinivasan, the decline in the proportion of people who are new to credit (NTC) in the lending ecosystem is advantageous for the general health of the banking sector. He commended banks for their responsible practises, pointing out the accessibility of detailed information on consumer behaviour and their understanding of the dangers associated with repayment as important elements that encourage quick payment.
Federal Bank is aggressively pursuing deeper connections with clients on the wholesale lending front, pushing beyond simply being a minor player in lenders’ consortiums. Through increased money flow monitoring, this technique not only enables more fee-based enterprises but also provides greater risk visibility.
In order to promote quicker growth in this sector, Srinivasan highlighted the significance of non-interest revenue and the bank’s focus on building solid, long-lasting connections.
Fedbank Financial Services Limited ( Fedfina ) offers a range of consumer and commercial financial solutions. Their services encompass loans for various needs, including home, auto, car, gold, and personal purposes, along with mortgage facilities. With a customer base in India, Fedbank Financial Services caters to the diverse financial requirements of individuals and businesses.
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