GIC-backed Indian bank picks IPO arrangers

Investors will be offered an estimated 10% stake in lender through IPO worth $1 billion

NEW DELHI •Bandhan Bank, the first Indian microfinance lender to get a banking permit, has picked arrangers for an initial public offering (IPO) that could raise at least 50 billion rupees (S$1.04 billion), people with knowledge of the matter said.

The lender, which is backed by Singapore sovereign wealth fund GIC, chose Goldman Sachs Group and JPMorgan Chase to advise on the share sale, according to the people.

Axis Bank, JM Financial and Kotak Mahindra Bank are also working on the offering, the people said, asking not to be identified because the information is private. 

Bandhan Bank had a net interest margin of 10.75 per cent in the quarter ended June 30, the highest among banks in the South Asian nation, while its bad-loan ratio was 0.82 per cent, according to company filings.

It was started as a microfinance company in 2001 and converted to a bank in 2015 as India approved new licences in an effort to tap rural savings and bolster access to credit. 

In line with the central bank guidelines, Bandhan Bank needs to get itself listed within three years from commencement of banking operations.

The Kolkata-based lender aims to sell shares next year, according to the people with knowledge of the matter. Investors will be offered an estimated 10 per cent stake in Bandhan Bank through the IPO, the people said.

Bandhan Bank had a net interest margin of 10.75 per cent in the quarter ended June 30, the highest among banks in the South Asian nation, while its bad-loan ratio was 0.82 per cent, according to company filings.

Details of the offering have not been finalised, and the fund-raising amount could increase depending on investor demand, the people said. A representative for Bandhan Bank said she could not immediately comment.

Bandhan Bank, led by chief executive officer  Chandra Shekhar Ghosh, is the first microfinance institution in India to receive a universal banking licence. It has 841 branches and more than 11 million customers, its website shows.

The bank is looking to grow its retail loan book. It has started offering loan against gold in as many as 25 urban branches and plans to expand the portfolio further.

The lender's investors include the World Bank's International Finance. It has a loan book of about 219 billion rupees, according to its website.

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A version of this article appeared in the print edition of The Straits Times on September 13, 2017, with the headline 'GIC-backed Indian bank picks IPO arrangers'. Print Edition | Subscribe