PE-backed CSB files for India IPO

According to the prospectus CSB will issue an undisclosed number of fresh shares, along with an offer for sale of up to 19.8 million shares from a number of existing shareholders. Pricing for the shares has not been announced, but various Indian media outlets have reported that selling shareholders are seeking around INR3.7 billion for their shares.

CSB's most significant private equity investor is Fairfax India, which owns more than 86 million shares in the bank, representing a 50.1% stake. Fairfax does not plan to sell any of its shares in the offering, according to a release. Siguler Guff, which has 2.1 million shares, will also retain its stake.

CSB was founded in 1920 as Catholic Syrian Bank and is based in Kerala, with a significant presence in Tamil Nadu, Karnataka, and Maharashtra. The bank offers a wide range of financial services, with a particular focus on small and medium-sized enterprises (SMEs), retail customers, and non-resident Indians. Services are delivered through multiple channels including 414 branches and 277 ATMs across 20 states and union territories, as well as micro ATMs, debit cards, and internet and mobile banking.

For the year ended March 2019, CSB reported INR14.8 billion in revenue, up from INR14.2 billion the year before. Over the same period the bank's net loss grew from INR3.2 billion to INR4.5 billion.

Fairfax India, the publicly-traded investment unit of Canada's Fairfax Financial Holdings, invested in CSB last year, acquiring 19.8 million shares for INR2.8 billion; the GP paid another INR9.3 billion to expand its holding to 86 million shares earlier this year. CSB's management brought in Fairfax to help support its planned transition to a "full service new age private sector bank" with a business model based on providing greater autonomy to internal business teams and an expanded focus on digital services.

The Reserve Bank of India reportedly approved Fairfax's acquisition of a majority stake on the condition that CSB pursue a public listing within a year of the initial investment. CSB previously filed for an IPO in 2015, but the offering was ultimately called off.

The CSB prospectus marks a break in a dry spell of PE-backed IPO filings that has continued for almost a year, with the exception of one application filed in December. This slowdown reflects a broader slowdown in Indian IPOs over the last few years related to macroeconomic uncertainty and discouraging sector trends, with only three PE-backed companies coming to market so far this year.

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• Topics
• South Asia
• IPO
• Financials
• India
• Financial Services
• Exit
• Siguler Guff & Co.