Coming up with stricter policies, the Securities Exchange Board Of India (SEBI) has rejected more than 5 IPO documents in the past few months. The board has rejected the IPO plea of Oravel Stays, Go Digit General Insurance, BVG India, and Fincare Small Finance Bank along with a few others. The offer documents of these major players were rejected by the exchange board on various fronts, including compliance with the regulatory policies and the company’s internal flaws in the documentation process. These reasons are primarily responsible for the document rejection, halting the process of raising funds by the company in the public domain.
Let’s take one step at a time and look at all the aspects of the IPO rejection of a company by the exchange board of India. Fincare Small Finance Bank IPO will be the topic of consideration for now!
Rejection Of Fincare Small Finance Bank IPO
On March 2, 2023, the Securities Exchange Board Of India returned the IPO draft papers of Fincare Small Finance Bank. After the expiration of one year contract to launch the issue (this one-year contract gives the company approval from the board to float in the primary market), the company refiled its draft with the exchange board in August 2022.
After getting SEBI’s approval to float its shares in the primary market in May 2021, Fincare Small Finance Bank filed documents claiming to raise Rs 1,330 crore through the IPO route but failed to launch it by July. The company then filed the draft again in August, following which it received a red signal from the exchange board.
If you were waiting for the company to go public to start investing in its shares, there is another way to generate returns; you can buy unlisted shares and make profits even before the company is available in the public domain.
Why Is SEBI Rejecting The Offer Plea?
The stock market watchdog has enforced stricter rules and regulations to examine and process the IPO offer documents of the various companies shooting their shot to go public. Sometimes the errors are attributed to the mistakes in the company documents, and other times subscriptions may be the reason for IPO non-allotment.
Here’s a list of the few reasons that may lead to the rejection of an IPO:
- Applying for various IPO applications using the same PAN number
- Wrong details on the IPO application form
- If the bid price is set lower than the issue price.
These could be the possible reasons for the rejection of an IPO. Apart from these general reasons, some investment bankers and professionals in the field have pointed out some other reasons that may lead to the IPO rejection. These include curbing red-tapism and bringing about transparency in the process. According to an article by The Indian Express, SEBI Chairperson Madhabi Puri Buch said that they wanted to cut the red tape involved in the filing of offer documents. It was also added that accurate valuations were crucial rather than just succumbing to the pressure from the promoters.
To promote better regulation and clarity in the offer filing process, the regulatory authority has also asked issuers to reveal their share pricing based on past transactions and fundraising based on the secondary sale of shares during the 18 months prior to IPO.
Some of the reasons mentioned above could be the possible reason for the rejection of the Fincare Small Finance Bank IPO offer. Let us look at the company details and other company details.
Fincare Small Finance Bank: Company Profile
Fincare Small Finance Bank started its operations on July 21, 2017. The bank’s operations were centered around providing low-cost banking services to the rural population of the country, and it has served 16 years in the sector, delivering unparalleled performance in the unbanked and underbanked services without fail.
The company functions on the lines of a “digital first” model catering to rural and semi-urban areas. It has shown good signs of growth in the banking sector, intending to provide better banking services to individuals, MSMEs, and other unorganised entities. It is backed by the support of marquee investors like True North Fund, Kotak Mahindra Life Insurance, SIDBI, and other major players in the domain.
The data table also shows that the company is backed by strong financials and good profit and loss statements. So, even before the company releases its IPO and marks its availability in the public market, it will be beneficial to get your hands on the Fincare Small Finance Bank unlisted shares without delay!
Company Financials
| Particulars | FY21 | FY20 | FY19 |
| Revenue From Operation | NA | NA | NA |
| EBITDA | 1,471.10 | 2,196.29 | 1,224.95 |
| EBITDA Margin (%) | NA | NA | NA |
| Profit After Tax | 1,434.49 | 1,019.80 | 975.50 |
| EPS | NA | NA | NA |
| ROE | 18.41 | 22.00 | 24.76 |
Fincare Small Finance Bank Unlisted Share Price
Along with multiple other IPO offers, the Fincare Small Finance Bank IPO offer plea was rejected by SEBI. This does not stop the investors and shareholders from getting financial benefits from the growth of the company. Investors have resorted to the unlisted market to get multiple returns. Let’s have a look at the Fincare Small Finance Bank unlisted share price and other details.
Fincare Small Finance Bank Unlisted Share Details
| Total Available Shares | 1000 |
| Face Value | Rs. 1 per equity share |
| Lot Size | 250 Shares |
| Current Unlisted Share Price | Rs. 65 per equity share |
The Fincare Small Finance Bank IPO rejection led some of the investors to change their investment strategies and portfolio, but the doors to the unlisted market are always open to trade and gain multiple returns on investments! So it’s better to bank the returns before the company goes public.
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