The Rs 1,200 crore initial public offering (IPO) of Fino Paytech-backed Fino Payments Bank has opened for subscription today. Fidelity Funds, Pinebridge, Global, SBI Life, Motilal, Oswald Funds, among other investors, have invested in the public issue.

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Rishi Gupta, MD & CEO; and Ketan Merchant, CFO, Fino Payments Bank, in an interview with CNBC-TV18, shared further details regarding the IPO and the business outlook.

The expectations were that the IPO would be a little bit bigger at about Rs 1300 crore. Gupta said, "Those were the market expectations but we had to look at the valuations and we wanted to leave money for the investors to come in at this stage. So, we priced it in a manner that we can leave some money for the investors and that is why the OFS, as well as the primary amount, remains intact."

The valuation of Fino Payments Bank at 10.5 times price-to-book appears to be a bit steep compared to traditional banking names. When asked how they arrived at the valuation, Merchant said, "There is no peer benchmark available, whilst we are a bank but we are a fintech with regulatory enablement. Around 97 percent of our revenue comes from fee income," he said adding that they do not carry any balance sheet risk.

"For fintech, it is six times trailing revenue -- our valuation comes at six times of our revenue in FY21 and that itself answers where and how we are priced off," said Merchant.

The promoter stake is expected to fall to 75 percent after the IPO. When asked who the existing promoter-shareholders are and how their stakes would be affected post IPO, Gupta said, Fino Payments Bank is promoted by Fino Paytech and it right now owns 100 percent but post listing it would come down to 75 percent.

The offer for sale (OFS) amount will go to the Paytech shareholders, and they will decide how they want to distribute. However, the decision to distribute among them will be taken post-IPO, clarified Gupta.

Talking about key drivers for growth going forward, Gupta said they are already four years plus into the banking space and have grown quite aggressively in the past couple of years.

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“We have nearly 71 percent growth in transaction volume in the last two years. Despite COVID last year, we grew our top line last year. This first quarter of FY22., we grew by about 50 percent of our transaction value vis-a-vis last year and 36 percent growth on our top line,” said Gupta, adding that they see a lot of potential for growth of the payment ecosystem in India.

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“Our focus will be to grow on the payment ecosystem for the next few years, expand our Merchant network, expand more products on to the merchant network also bring some of the emerging India customers on to the digital platform,” said Gupta.

According to him, the reason behind raising capital is to build up the entire infrastructure on digital technology and marketing to reach the last mile in a more progressive manner with more products.

Watch the accompanying video for the full discussion

(Edited by : Bivekananda Biswas)

First Published:Oct 29, 2021 3:24 PM IST