Fino Payments Bank IPO: Opens tomorrow; key details that investors must know before investing

Fino Payments Bank Limited's initial public offering (IPO) will open for subscription on Friday, October 29, 2021. The public issue will close on Tuesday, November 2, 2021.

The fintech company has fixed a price band of Rs 560 to 577 per share as the company seeks to raise up to Rs 1,200 crore from the public offering.

The fintech company's public issue will include a fresh issue of Rs 300 crore and an offer for sale of up to 1,56,02,999 shares (worth Rs 900 crore at the upper band) by the promoter Fino Paytech, according to the draft red herring prospectus filed with the market regulator. The company will not receive any proceeds from the Offer for Sale.

A total of 75 per cent of the primary market offering has been reserved for qualified institutional buyers, 15 per cent for non-institutional investors and 10 per cent for retail investors.

Bids can be made for a minimum of 25 Equity Shares and in multiples of 25 shares thereafter. The maximum subscription amount for the retail investors is fixed at Rs 2 lakh. Maximum Subscription Amount for Employee is fixed at Rs 5 lakh.

Issue Timeline

• Bidding period: October 29 to November 2, 2021.
• Allotment: November 9, 2021.
• Refund Initiation: November 10, 2021.
• Share Crediting: November 11, 2021.
• Listing: November 12, 2021.

Axis Capital Limited, CLSA India Private Limited, ICICI Securities Limited, Nomura Financial Advisory and Securities (India) Private Limited are the book running lead managers for the public issue. Axis Bank is the sponsor bank for the issue while KFin Technologies Private Limited is the registrar for it.

The fintech company will utilize the net proceeds from the fresh issue to augment its Tier - 1 capital base for meeting future capital requirements, which are expected to arise out of growth in our Bank's assets, investments and to ensure compliance with regulatory requirements on capital adequacy prescribed by the RBI from time to time.

The Bank would require additional Tier-I capital for penetration of business/ services in uncovered/ sparsely covered areas, modernization to technology (banking) platform to handle business in line with large volumes on account of growing business development of customer-oriented banking/ financial products, activities to generate awareness of bank's products and services among targeted population and country, keeping sufficient capital meeting the regulatory/ compliance requirements to operate as a Payments Bank. This future need for capital will be met through internal accruals as well as proceeds of the Offer.

Company Strengths

• Ranked third among banks in facilitating digital transactions as per DRHP and Ministry of Electronics & Information Technology (as of Feb'20).
• Third highest deposit growth rate in the financial year 2021 as per DRHP and CRISIL.

Potential Risks

• Undertake fee and commission-based activities and their financial performance may be adversely affected by an inability to generate income from such activities.
• May face cyber-threats attempting to exploit their network to disrupt products and support services to customers.

Fino Payments Bank is a growing fintech company offering a diverse range of financial products and services that are primarily digital and have a payments focus. They offer such products and services to their target market, being the unserved and underserved population of Indian society through a pan-India merchant network.

They do not offer any lending products and do not hold credit risk for loans. Their product and service offering includes liability products and other banking products that generate fee and commission-based income, such as CASA, micro-ATMs and AePS transactions, domestic remittances and the issuing of debit cards.

Fino PayTech Limited was granted in-principle approval to set up a Payments Bank on September 7, 2015, and was granted a license by the RBI to set up a Payments Bank on March 30, 2017. Following our incorporation on April 4, 2017, we commenced operations as a Payments Bank with effect from June 30, 2017, pursuant to the receipt of the RBI License. Prior to the commencement of operations as a Payments Bank, our operations formed part of Fino Fintech Limited (a 100% subsidiary of Fino Paytech Limited) whose name got converted to Fino Payments Bank Limited.

It is present in 94 per cent of India's districts with over 6.41 lakh banking outlets, 54 Bank Branches and 143 Customer Service Points. Invested in by ICICI Bank, BPCL, Blackstone, IFC Fino Payments Bank has an enviable financial and distribution track record. This powerful network registers impressive growth numbers every year!