The initial public offering (IPO) of Suryoday Small Finance Bank witnessed a tepid response on day 1 of bidding and was subscribed 42 percent on March 17. The IPO will close on March 19. Investors put in bids for only around 56.32 lakh equity shares against the offer size of 1.9 crore shares.

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The portion reserved for retail investors is subscribed 84 percent whereas qualified institutional buyers and non-institutional investors have not yet started to bid for their quota.

The company plans to raise around Rs 581 crore through the offer with a price band set at Rs 303-305 per equity share. It has already garnered Rs 170.12 crore from 13 anchor investors, ahead of its initial public offer.

READ MORE: Suryoday Small Finance Bank IPO: Here are key things to know

This is the fourth small finance bank to come out with IPO after AU Small Finance Bank, Equitas Small Finance Bank and Ujjivan Small Finance Bank.

The IPO is a mix of an offer for sale (OFS) by shareholders and promoters and a fresh issue in which the company is looking to sell 1.9 crore shares.

The company was incorporated in 2009 as a microfinance institution and later started operations as an SFB in January 2017. The company has diversified into other products like commercial vehicle loans, affordable home loans, micro business loans, secured and unsecured business loans to MSME/SME and corporates, and financial intermediary group loans.

The net fresh issue funds are going to be used towards augmenting Tier–1 capital base to meet future capital requirements. The IPO will also meet the RBI's listing requirement within three years from the bank launch. The company started small finance bank services in January 2017.

READ MORE: Is Suryoday Small Finance Bank IPO a good bet?

Analysts have mixed views on the IPO and are confused between high valuations and good return ratios. Some brokerages recommended the issue with a long-term perspective given the expected overall growth going ahead while others are concerned about the current asset quality, high valuations, and regional concentration.

First Published:Mar 17, 2021 2:53 PM IST