FedFina Successfully Raises Rs 325 Crore From Anchor Investors Ahead Of IPO Debut

Fedbank Financial Services managed to secure a substantial Rs 324.67 crore from anchor investors just a day before its much-anticipated initial public offering (IPO) opened its doors on Tuesday, November 21. The company, set to debut on the stock market, disclosed the names of the 22 investors participating in the anchor book through a regulatory filing. Additionally, four prominent mutual funds submitted applications through five schemes.

The company, in an exchange filing, revealed, "The board of directors of the company in their meeting held on November 21, 2023, and the selling shareholders in consultation with the Book Running Lead Managers (BRLMs) to the offer, has finalized the allocation of 23,191,374 equity shares to anchor investors at the anchor investor allocation price of Rs 140 per equity share."

Among the major anchor investors are financial powerhouses such as Goldman Sachs (Singapore) PTE, Societe Generale, HDFC Mutual Fund, HDFC Life Insurance, SBI Life Insurance, Nippon Life India, Kotak Mahindra Life Insurance, Tata AIA Life Insurance, Bajaj Allianz Life Insurance, and Teach India. Notably, domestic mutual funds, including Edelweiss Trusteeship Co Ltd., Bandhan Emerging Business Fund, HDFC Mutual Fund, and Nippon Life India, also participated in this strategic financial move.

ICICI Securities Ltd, BNP Paribas, Equirus Capital Private Ltd, and JM Financial Ltd served as the Book Running Lead Managers to the issue, while Link Intime India Private Ltd took on the role of registrar to the offer.

The subscription for Fedbank Financial Services IPO is set to kick off on Wednesday, November 22, with the closing scheduled for Friday, November 24. The IPO price band has been established in the range of Rs 133 to Rs 140 per equity share, each having a face value of Rs 10.

Fedfina IPO, an arm of Federal Bank, comprises a fresh issue of equity shares worth Rs 600 crore and an offer-for-sale (OFS) of up to 35,161,723 equity shares by the promoters and selling shareholders. The offer, with a face value of Rs 10 per equity share, involves the Federal Bank, the promoter shareholder, potentially selling up to 5,474,670 equity shares, and True North Fund VI LLP, the investor selling shareholder, considering selling up to 29,687,053 equity shares.

According to the Red Herring Prospectus (RHP), the net proceeds from the new issue will be channelled towards increasing the Tier-I capital base, meeting future capital requirements stemming from business expansion, and covering offer expenses.

As of today, the Grey Market Premium (GMP) for Fedbank IPO stands at +5, indicating that Fedfina's share price is trading at a Rs 5 premium in the grey market, as reported by investorgain.com. Considering the upper end of the IPO price band and the current grey market premium, the estimated listing price of Fedbank Financial Services shares are projected at Rs 145 apiece, a 3.57% increase from the IPO price of Rs 140.

The 'grey market premium' serves as an indicator of investors' willingness to pay more than the issue price, shedding light on the heightened anticipation and positive sentiment surrounding Fedbank Financial Services as it gears up for its IPO debut.