ESAF Small Finance Bank- 7 key risks to consider before subscribing to the IPO
₹463 crore from the IPO. Some of the key risks highlighted by the ESAF Small Finance Bank in its Red Herring Prospectus or RHP include- 1.Any Uncertainty in relation to the continuing effects of the COVID-19 pandemic on ESAF Small Finance Bank business.
2-Any adverse developments in the microfinance sector 3-ESAF Small Finance Bank ability to recover unsecured advances in a timely manner or at all. 4-Increase in operating expenses of ESAF Small Finance Bank without a corresponding increase in income; 5- ESAF Small Finance Bank dependency on ESMACO which is its business correspondent and agreement with other business correspondents which are on a non-exclusive basis 6- ESAF Small Finance Bank ability to comply with stringent regulatory requirements and prudential norms which we are subject to; 7- ESAF Small Finance Bank ability to control the level of NPAs in our portfolio Also Read- ESAF Small Finance Bank IPO raises ₹135 crore from anchor investors; check details While the company plans to raise ₹463 Crore out of this ₹72.3 Crore is an offer for sale (OFS).
It is only net proceeds from fresh issue of ₹390.7 Crore that will be utilised to augment its Tier – I capital base to meet the future capital requirements. In the OFS, promoter of ESAF Financial Holdings will sell shares worth ₹49.26 crore, while PNB MetLife India Insurance Company and Bajaj Allianz Life Insurance Company will offload shares worth ₹23.04 crore.
ESAF Small Finance Bank mainly focusing on providing loans to rural and semi-urban customers. ESAF Small Finace Bank products consist of Micro Loans, retail loans, MSME loans; loans to financial institutions; and agricultural loans.
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