Equitas Small Finance Bank Aiming For A March 2020 Listing, Says CEO
The delay in Equitas Small Finance Bank’s listing was because of its effort to merge with Equitas Holdings, CEO PN Vasudevan says.
Equitas Small Finance Bank aims to list on the bourses by March next year, irrespective of when its merger with holding company Equitas Holdings Ltd. would take place, said Managing Director and Chief Executive Officer PN Vasudevan on Monday.
This comes days after the Reserve Bank of India denied extension of the Sept. 4 deadline to the lender for its listing. As a punitive measure, RBI imposed restriction on Equitas Small Finance Bank’s ability to open new branches till further notice and froze the MD and CEO’s remuneration at the existing level.
Shares of Equitas Holdings, which owns 100 percent of the microfinance business, slumped as much as 12 percent—its biggest intraday fall in more than a month. That compares with nearly a 0.5 percent gain in the benchmark BSE Sensex.
According to the bank’s licence agreement, Equitas Small Finance Bank was required to list its shares within three years of touching a net worth of Rs 500 crore. While it was aware of the deadline, the delay in listing was because of its effort to merge the bank with its holding company, Vasudevan told BloombergQuint in an interview.
“Basically, we have a holding company which is listed. The holding company owns 100 percent of the bank and has no other business activity of its own. So, we were trying to see how to have only one listed entity for one business, which is the bank business,” he said.
The bank had proposed a merger between the two companies but the Securities and Exchange Board of India disapproved of it since the lender’s promoter—the holding company—has a five-year lock-in period on 40 percent of its shares.
In January, the lender’s board approved a new scheme where the bank would capitalise around Rs 890 crore of its free reserves and issue shares without cash consideration to shareholders of the holding company, and then get those shares listed on the exchanges, Vasudevan said.
The approval for the scheme is currently pending at the market regulator. If Equitas receives this approval, it will get the remaining necessary approvals from the National Company Law Tribunal and list the business in another six months. If the approval does not come through, it will list the shares through an initial public offering, which will also take six months, he said.
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