Mumbai FedBank Financial Services Ltd. (Fedfina), a retail-focused non-bank lender set up by Federal Bank Ltd., is planning a public listing, two people familiar with the matter said.
The Kerala-based company is expected to file draft papers for initial public offering (IPO) soon, making it one of the few bank-owned non-banking financial companies (NBFCs) in India that are publicly traded. Huh.
Fedfina, which received its Non-Banking Financial Company license in 2010, has over 435 branches across the country, offering Gold Loans, Home Loans, Loan Against Property (LAP) and Business Loans.
In 2018, domestic private equity fund True North bought about a 26% stake in Fedfina ₹400 million.
“Fedfina is working with ICICI Securities, JM Financial and Equirus Capital on the initial public offering. They are likely to file the draft prospectus by the end of this month or by next month.”
“The initial public offering will be a mix of primary and secondary share sales. Federal Bank and True North are both likely to sell a small portion of their shares, but on a larger scale, this will involve a new issue of shares to raise growth capital for the business. The size of the initial public offering can be as high as $100-150 million. Fedfina is a retail-focused non-banking financial company and has seen strong growth in sectors such as gold loans,” the person said.
Federal Bank and True North did not respond to emails.
Under management stood on Fedfina’s property ₹4,863 crore as of the end of March, with retail loans comprising 96% of the loan book, according to the company’s website.
The Company recorded Gross Non-Performing Assets and Net Non-Performing Assets at 1.04% and 0.71% respectively at the end of FY21.
India Ratings and Research said in a report on 5 April 2021 that Fedfina has started expanding into new products and geographies.
“Loans against property and construction financing segments, which started operations a few years back, are yet to be experienced. The company has expanded its product range into small ticket LAP (Average Ticket Size.) ₹14 lakh), business loans, affordable housing loans and structured finance loans,” as per the report.
“As part of its strategy, Fedfina plans to aggressively develop its two core products, i.e., loans against assets and long-term gold loans, with a focus on gold loans. And there is significant branch expansion as compared to the core network. The near future. This will improve the full franchise size and profitability in the long term,” the report said.
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