Capital Small Finance Bank IPO Subscribed 4 times

The stock of Capital Small Finance Bank IPO has a face value of ₹10 per share and the price band for the book building IPO has been set in the range of ₹445 to ₹468 per share. Capital Small Finance Bank IPO will be a combination of a fresh issue of shares and offer for sale (OFS). While fresh issue infuses fresh funds into the company, it is also EPS and equity dilutive. On the other hand, OFS is just a transfer of ownership. The fresh issue portion of the IPO of Capital Small Finance Bank Ltd comprises the issue of 96,15,384 shares (96.15 lakh shares approximately), which at the upper price band of ₹468 per share will translate into a fresh issue size of ₹450.00 crore.

The offer for sale (OFS) portion of the Capital Small Finance Bank IPO comprises the sale of 15,61,329 shares (15.61 lakh shares approximately), which at the upper price band of ₹468 per share will translate into an OFS size of ₹73.07 crore. The OFS size of ₹15.61 lakh shares will be entirely offered by investor shareholders. Among the investor shareholders offering shares in the OFS are Oman India Joint Investment Fund II (8.37 lakh shares), Amicus Capital Private Equity LLP (1.51 lakh shares), Amicus Capital Partners India (0.17 lakhs hares) and others (5.56 lakhs shares). Thus, the total IPO of Capital Small Finance Bank Ltd will comprise of a fresh issue and an OFS of 1,11,76,713 shares (111.77 lakh shares approximately) which at the upper end of the price band of ₹468 per share aggregates to total issue size of ₹523.07 crore.

The IPO of Capital Small Finance Bank Ltd will be listed on the NSE and the BSE on the IPO mainboard. The fresh funds will be used to shore up its capital base, which is a basic necessity for small finance banks to be able to expand their loan books to be compliant with capital adequacy regulations. Promoters currently hold just 24.01% in the company, which will get diluted post the IPO to 18.88%. The IPO will be lead managed by Nuvama Wealth Management, DAM Capital Advisors (formerly IDFC Securities), and Equirus Capital. Link Intime India Private Ltd will be the registrar to the IPO.

How subscriptions evolved in the IPO period

While the QIB portion and the HNI / NII portion picked up traction on the last day, the overall journey was quite tepid for the retail investors. In fact, the QIB portion, the retail portion and the HNI / NII portion got fully subscribed only on the second day of the IPO and signs of some traction were visible across the categories only on the last day of the IPO. The IPO was kept open for a total period of 3 consecutive trading days. While the retail portion did start off strong, the eventual traction was tepid; next to the QIB and the HNI / NII portion respectively. Here is the day-wise progress in IPO subscription of the total available quota. The available QIB quota in the table below represents the oversubscription; is net of the anchor allocation of shares, done one working day prior to the opening of the IPO.

As can be seen from the above table, the overall IPO got just 4.00 times subscribed at the close of the third and final day of the IPO on 09th February 2024. Here is a quick look at how the various categories saw traction on the last day of the IPO.

• The QIB portion got 0.30 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 1.10X to 6.64X.
   
• The HNI / NII portion got 0.39 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 1.08X to 4.05X.
   
• Retail portion got 0.73 times subscribed at the end of the first day of the IPO. However, on the third and final day of the IPO, the subscription moved from 1.41X to 2.49X.
   
• The overall IPO got 0.53 times subscribed at the end of the first day of the IPO. However, on third and final day of the IPO, overall subscription moved from 1.25X to 4.00X.

Rapid update on the overall IPO response

The IPO saw fairly tepid response on the Day-1 and Day-2, with most of the action visible only on Day-3 of the IPO, as is normally the case. However, the IPO did close with relatively tepid subscription numbers at the close of Day-3. In fact, the IPO of Capital Small Finance Bank Ltd got fully subscribed only on the second day of the IPO itself. As per the combined bid details put out by the BSE at the close of Day-3, Capital Small Finance Bank Ltd IPO was subscribed 4.00X overall, with best demand coming from the QIB segment, followed by the HNI / NII segment and the Retail segment in that order.

In fact, the institutional QIB segment and the HNI / NII segments saw some moderately better traction on the last day. The HNI portion did do well and a lot of the surge of funding applications and corporate applications did come in on the last day of the IPO. Retail portion was relatively less aggressive, although it was fully subscribed on Day-2 of the IPO itself, but subsequent traction was a tad more cautious. Firstly, let us look at the details of overall allocation of shares to various categories of investors. It may be noted that in the final allocation of shares, minor variations are normal as part of intra-segment adjustments. These, however, do not impact the total number of shares materially.

Having understood the allocation of shares across various categories, Let us look at how the subscription data played out for the IPO at an overall level and at a more granular level.

As of close of 09th February 2024, out of the 81.47 lakh shares on offer in the IPO, Capital Small Finance Bank Ltd saw bids for 326.06 lakh shares. This implies an overall subscription of 4.00X at a macro level. The granular break-up of subscriptions was in favour of the QIB investors followed by the HNI / NII investors and the Retail investors in that order. QIB bids and NII bids typically gather most of the momentum on the last day, and that was the case in this issue also in the case of QIB bids. Both the QIB and the NII bids picked momentum on the last day and added to its heft of the previous days. Here are the details of the category-wise subscription.

Data Source: BSE

Subscription status of QIB Portion

On 06th February 2024, Capital Small Finance Bank Ltd completed the bidding for its anchor allocation. There was a robust response as the anchor investors participated through the process of book building. A total of 33,53,013 shares were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹468 per share (including premium of ₹458 per share) which resulted in an overall allocation of ₹156.92 crore. The anchors absorbed 30.00% of the total issue size of ₹523.07 crore.  It may be noted that half the anchor portion is locked for 1 month from the date of allotment i.e. up to March 13th, 2024. The other 50% is locked for 3 months from the date of allotment i.e., up to May 12th 2024.

The QIB portion (net of anchor allocation as explained above) had a quota of 23.11 lakh shares of which it has got bids for 153.33 lakh shares at the close of Day-3, implying a subscription ratio of 6.64X for QIBs at the close of Day-3. QIB bids typically get bunched on the last day and while the heavy demand for the anchor placement had given an indication of the institutional appetite for the Capital Small Finance Bank Ltd IPO subscription overall, the actual demand did turn to be quite robust for the IPO.

Subscription status of HNI / NII Portion

The HNI portion got subscribed 4.05X (getting applications for 70.92 lakh shares against the quota of 17.51 lakh shares). That is a relatively strong response at the close of Day-3 largely because this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, come in on the last day of the IPO, and that was visible as the overall HNI / NII portion added to its heft on the last day of the IPO. Apart from the QIB portion, even HNIs saw good traction on the last day.

Now the NII/HNI portion is reported in two parts viz. bids below ₹10 lakhs (S-HNI) and bids above ₹10 lakhs (B-HNI). The bids above the ₹10 lakh category (B-HNIs) typically represents most of the major funding customers. If you break up the HNI portion, the above ₹10 lakh bid category got subscribed 3.48X while the below ₹10 lakh bid category (S-HNIs) got subscribed 5.20X. This is just in the form of additional information and is already part of the overall HNI bids explained in the previous para.

Subscription status of Retail Individuals

The retail portion was subscribed just 2.49X at the close of Day-3, showing relatively strong appetite. It must be noted that retail allocation is 35% in this IPO. For retail investors; out of the 40.86 lakh shares on offer, valid bids were received for 101.81 lakh shares, which included bids for 89.22 lakh shares at the cut-off price. The IPO is priced in the band of (₹445 to ₹468 per share) and has closed for subscription as of the close of Friday, 09th February 2024.