Unlisted Shares Of IPO-Bound Fino Payments’ Parent Decline To INR 365

The unlisted shares of Fino PayTech, the parent company of IPO-bound Fino Payments Bank, have declined from the highs they touched in August post the filing of the draft red herring prospectus (DRHP).

Currently, its shares in the unlisted market are trading at INR 360-365 apiece compared to the high of INR 420-425 reached in August.

Speaking to Inc42, Manan Doshi, co-founder of Unlisted Arena said, “This can be seen as a minor correction or a cooling-off post the 4x growth in just 8 months.”

The shares have been largely stable in the past two weeks. Last week, they were around INR 370 per share.

Going ahead, Doshi observed that the traders would assume INR 252 as the base or the floor price as Fino PayTech earlier this month went ahead with rights issue with a share price of INR 252 per scrip.

Its shares in the unlisted space have multiplied in 2021 ranging from INR 100-120 in January to INR 420-425 in August, largely on the back of the IPO hopes and the eventual filing of the draft prospectus for the offering.

Although the shares have off late somewhat subdued, market sentiments are still bullish, experts noted, backed by a profitable business of the fintech startup, compared to its bigger contemporaries.

Further, Doshi added that possibility of a reverse merger of Fino Payments Bank with its holding company Fino PayTech post the much-awaited IPO also has kept the investor sentiments robust.

The public offering is expected to hit the market after 1 or 2 months, market players said. The website of the Securities and Exchange Board of India (SEBI) showed that the application for approval of the IPO is under process.

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. 

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, giving a much-needed boost to the sector players.