Ujjivan/Ujjivan Small Finance Bank - The road to a Zero Holdco Discount will yield 68%+ upside
In Dec 2019, Ujjivan Small Finance Bank (USFB IN) raised around US$105m in its Indian IPO. USFB is the small finance banking arm of Ujjivan Financial Services (UJJIVAN IN).Ujjivan doesn't own much apart from USFB but yet it trades at a 40.5% discount. Since my previous note on the trade Ujjivan stock is up 8% while USFB has been trading flat after the initial IPO pop of 50% on its listing day.
Ujjivan still owns a 83.33% stake in USFB but needs to bring it down to below 40% by Jan 2022. We spoke to the company to get an update on the different possible scenarios for reducing Ujjivan's stake.
You can find my previous coverage on the IPO and background below:
Ujjivan's IPO in 2016, Ujjivan Financial IPO - Morphing into a Bank Gives It a License to Mint Money While Doing Some Good, at which time the SFB was about to be setup.
Background of USFB listing, Ujjivan Small Finance Bank Pre-IPO - Shouldn’t Be Forced to List
Deal dynamics and financial performance of the SFB, Ujjivan SFB IPO - Might Not Be as Good as the Previous Listing but It Has an Alternative as Well
IPO and HoldCo trading update: Ujjivan SFB IPO Trading - Hottest Indian IPO for 2019; There Is Still an Alternative Trade
Ujjivan Financial Services Limited, formerly Ujjivan Financial Services Private Limited, is a non-banking finance company engaged in the micro finance lending business. The Company's products and services include Microfinance, Micro and Small Enterprise Business (MSE) Finance, Agriculture and Animal Husbandry Finance, and Housing Finance. Its products are classified under two categories: Group Loans and Individual Loans. Its products are further sub-divided into agricultural, education, home improvement, home purchase and livestock loans. MSE and Housing loans are both secured and unsecured loan products, which are available for both existing and open market customers. It serves economically poor in urban and semi urban areas. Through its partnership with Bajaj Allianz Life Insurance Company, it offers life insurance to its customers and their spouses. It operates through approximately 470 branches spread over 20 states in approximately four regions: South, East, North and West.
Aequitas Research is a leading ECM research firm with a focus on IPOs and placements/follow-on offerings across the Asia Pacific with deal size of over USD100m.
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