CSB Bank has made a fantastic debut – getting listed on the BSE at Rs.275 v/s IPO price of Rs.195. It also went as high as Rs.304.

The IPO had got a great response – subscribing 87 times. The lion’ share of the IPO was taken by HNIs at 164.68 times, followed by QIBs at 62.18 times and retail investors at 44.25 times.

The object of the IPO was not to raise funds but on a directive to the bank by RBI, to list shares by 30th Sep2019, a requisite while permitting Fairfax to purchase majority stake. Canadian billionaire Prem Watsa’s Fairfax held 50.09% stake as a promoter (purchased at Rs. 140 per share, since Oct 2018) but voting rights were capped at 26%. As per prevailing RBI regulations, this shareholding has to reduce to 40% within 5 years, to 30% within 10 years and finally to 15% within 15 years. Post the IPO, the stake now stands at 49.73%.

Thus, selling overhang of large chunks intermittently by the promoter will remain.

In our IPO analysis, we had said, “While recent promoter fund infusion is positive for the bank, it is yet to prove its mettle on execution capabilities and underwriting. Hence, we advise to wait for the bank to perform over the next few quarters, as current IPO valuations are not too attractive either.