CBS Bank reaps big after its IPO is subscribed 87 times on last day

CSB Bank received an overwhelming subscription to its Initial
Public Offering (IPO) hitting 87 times on the final day. The last day of buying
the Kerala-headquartered company’s
shares was Tuesday, ending in a whopping 100+
subscribed crore shares against the issued 1.15 crore shares.

According to
sources close to the
bank’s IPO, the slots for retail individual investors were oversubscribed
by 44.25 times, non-institutional investors by 164.68 times, and qualified
institutional buyers (QIBs) by 62.18 times.

The bank issued
24 crore shares as well as an offer-for-sale of 1,97,78,298 equity shares.

CSB will be listed on both BSE
and NSE, with the final share allotment date set for Dec. 2. Brokerages say the
public listing is expected to take place two days after.

The holdings of the bank’s core promoter, Fairfax India Holdings Corporation is
expected to reduce from the current 50.09%
to 49.73%. As per the requirements of RBI, the promoter’s stake has to go down
to 40% in five years, 30% in 10 years and lastly 15% in 15 years.

The bank whose loan
portfolio is largely made up of gold advances boasts of 412 branches across America
and Asia.

Precious metals
loans comprise about 33.17% of the bank’s total advances, according to
brokerages. During its first-half report, the bank recorded a profit of ₹44
crores (circa $6.1 million) with gross Non-Performing Assets (NPAs) reducing from
7.25% as of the same period in 2017 to 4.87% in 2019.

In a note, HDFC Securities said: “while
CSB Bank has a long operating history as a traditional bank, it is currently
focusing on implementation of strategic changes in its business model to function
efficiently as a full-service new age private sector bank backed by its new
marquee investor, Canadian billionaire Prem
Watsa’s Fairfax India Holdings Corporation.”

Incorporated in 1920,
the bank has over 1.3 million customers mainly in the Retail, SME and NRI sectors.
One of the bank’s core business lines is to distributed life insurance products
of HDFC, Edelweiss Tokio, and ICICI Prudential Life Insurance Company Ltd and
general insurance products of Reliance General Insurance Company Ltd.