Fairfax-backed CSB Bank fixes share price at Rs 193-195 for IPO on Nov 22

Fairfax-controlled CSB Bank, formerly known as Catholic Syrian Bank, has announced the launch of its around Rs 410 crore initial public offering (IPO). The Kerala-based private lender has fixed the share price band at Rs 193-195 which likely to hit market between November 22 and 26.

The bids for the offer can be applied for a minimum of 75 shares and its multiples.

The IPO will help the bank raise Rs 24 crore, as shareholders sell 19.78 million shares for Rs 385.71 crore via the offer for sale route.

Some of the shareholders include ICICI Lombard General Insurance, HDFC Life Insurance, ICICI Prudential Life Insurance, The Federal Bank, Bridge India Fund, Satellite Multicomm, Way2Wealth Securities and Edelweiss Tokio Life Insurance.

According to Bank's DRHP, the proceeds will augment the bank's tier-1 capital base to meet its future capital requirements. While 75 per cnet of the offer is kept aside for qualified institutional buyers (QIBs), 15 per cent is reserved for non-institutional investors and 10 per cent for retail investors.

The book running lead managers for the issue are Axis Capital and IIFL Securities.

For the six months ended September 30, CSB reported a revenue of Rs 817 crore. Its profit, for the first half of FY20, stood at Rs 44.3 crore, reversing the loss of Rs 65.7 crore reported in FY19.

The bank’s gross non-performing assets (NPA) stood at 2.86 per cent of its total advances, declining from 4.87 per cent as of March 31. The bank’s total NPA provisioning and write-offs stood at Rs 271 crore for the six month period ended September 30, against Rs 1,131 crore provisioning and write offs between FY17-19.

The bank and FIH Mauritius Investments Ltd. (FIH-M) have entered into an investment agreement on February, 2018 which was modified on October 15, 2018, pursuant to Fairfax agreeing to acquire shares up to 51 per cent of the post issue paid-up capital of the Bank.

The Reserve Bank of India had approved the first stake sale of an Indian bank to a foreign non-banking entity in July last year. As per the RBI condition, Fairfax cannot dilute its shareholding below 40 per cent for five years and within the period if the Bank need additional capital, Fairfax has to provide it without increasing the shareholding of 51 per cent, said sources. During this period, Fairfax cannot transfer shares without the approval of the Board, as per the amended article of association.

Fairfax agreed to invest around Rs 1,200 crore billion in the Bank. Post receipt of requisite approvals, the Bank on October 19, 2018 allotted securities on a partly paid basis (1,98,32,130 Partly Paid Equity Shares and 6,64,63,329 compulsorily convertible Warrants) as per the terms of the Offer, Reserve Bank of India letter dated July 12, 2018 and extant FEMA guidelines.