Grey Market Shares Of IPO-Bound Fino Payments Bank’s Owner Trading At INR 375

Unlisted shares of Fino PayTech, the 100% owner of IPO-bound Fino Payments Bank, have shot up to a price of INR 375 apiece in the grey market. This happened after Fino Payments Bank on Friday (July 31) filed its draft red herring prospectus (DRHP) with capital markets regulator SEBI to raise INR 1,300 Cr via an initial public offering.

“Fino PayTech’s unlisted shares were trading at INR 200- INR 225 levels just two months back and at INR 100-120 levels at the beginning of the year. While Fino PayTech shares are usually available in the market, the sudden surge in demand after the IPO announcement has led to a shortage,” says Manan Doshi, co-founder of Unlisted Arena, a platform that deals in pre-IPO and unlisted sares.

There is a slew of fintech IPOs happening simultaneously after the stellar showing of Zomato on its public market debut. While insuretech startup Policybazaar filed its DRHP on Monday (August 1) to raise INR 6,000 Cr via an IPO, fintech giant Paytm aims to raise INR 16,600 Cr, and payments startup Mobikwik is looking to mop up INR 1,900 Cr through their respective IPOs. Interestingly, the price of Paytm shares in the grey market saw a 22.5% jump in the week after Zomato’s blockbuster public listing.

Founded in 2007, Fino PayTech got the RBI’s approval to set up a payments bank in September 2015. The payments bank’s operations started in June 2017 and competes with Paytm Payments Bank, Airtel Payments Bank, Jio Payments Bank, among others. 

While the payments bank is a wholly-owned subsidiary of Fino PayTech, the parent company itself is owned by a host of stellar names. Bharat Petroleum Corporation owns 22.91% of the company, Blackstone has a 15.13% shareholding, International Finance Corporation owns 7.79%, LIC has a 1.81% stake and ICICI Group companies collectively own 18%, among others.

Fino Payments Bank posted a total income of INR 791 Cr, resulting in a net profit of INR 20.4 Cr in FY21. The bank’s expenses as per the filings have seen a slight increase from INR 7,23.4 Cr in FY20 to INR 770.5 Cr in FY21. In contrast, the payments bank had posted a loss of INR 32 Cr in FY20. 

Compared to FY20, the bank’s total deposits have grown nearly 2x in 2021 to INR 125 Cr from INR 69 Cr. It has a total deposit of INR 242 Cr as of March 31, 2021, with total borrowings worth INR 180 Cr. 

In FY21, Fino processed and facilitated more than 434 Mn transactions having a gross transaction value of INR 1.32 Lakh Cr. The bank said it has the largest network of micro ATMs as of March 2021, with a market share of 55% along with a network of 6.4 Lakh merchants and 25.7 Lakh accounts.

Payments banks have been around in the Indian market for years, but only in recent times have they become more relevant stakeholders in the fintech ecosystem. In April, the Reserve Bank Of India announced that payments banks will be allowed to enhance the limit of maximum balance at the end of the day from INR 1 lakh to INR 2 lakh per individual customer. The decision was taken based on a review of performance of such banks and with a view to encourage their efforts for financial inclusion and to expand their ability to cater to the needs of their customers, including MSMEs, small traders and merchants. 

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