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Salient features of the IPO:

• BLS E-Services Ltd. (BLSEL), a technology-backed basic banking service provider is coming up with an IPO to raise around Rs. 310cr, which opens on 30th Jan. and closes on 1 st Feb. 2024. The price band is Rs. 129 - 135 per share.

• The IPO only consists of fresh issue of shares. From the fresh issue net proceeds, BLSEL will be utilizing Rs. 97.6cr for strengthening the technological infrastructure and consolidating its existing platform; Rs. 74.8cr will be used for setting-up BLS Stores and another Rs. 28.7cr will be used for inorganic growth acquisitions. Rest of the net proceeds will be used for general corporate purposes.

• The company in consultation with the BRLM has undertaken a pre-IPO placement of 0.11cr share at Rs. 125 per share. Total amount realized was Rs. 13.8cr. Consequently, the number of fresh issue shares was reduced by similar quantum.

• Post-IPO, promoter & promoter group will have 68.89% stake in the company, compared to 92.28% earlier. Consequently, public shareholding will increase from 7.72% to 31.11%.

Key competitive strengths:

• Asset light business model

• Enabling social and financial inclusion in India

• Multiple cross-selling and up-selling opportunities, network effect and wide reach for customer acquisition

• Business model with diverse sources of revenue and negligible customer acquisition and retention costs

• Successful track record of acquisitions

• Experienced senior management, skilled employees, strong parentage of promoters i.e. Mr. Diwakar Aggarwal & Mr. Shikhar Aggarwal and corporate promoter BLS International Services Ltd.

Risk and concerns:

• General slowdown in the global economic activities

• Unfavorable government policies & regulations

• Improving penetration of digital banking in the operating markets

• Difficulty in scaling-up the operations

• Unfavorable commission rate

• Revenue concentration risk

• Difficulty in maintaining the profitability

• Competition

Below are the key highlights of the company:

• Introduced in Jan. 2006, Business Correspondent (BC) is the banking outreach initiative of RBI to boost financial inclusion in the country. The initiative aimed at leveraging information & communication technology to widen access to the banking system. BCs are mainly retail agents engaged by banks to offer banking services at locations other than a bank branch/ATM. Later in Jul. 2014, the RBI allowed micro-finance institutions to work with banks as BCs.

• Since FY21, the BC network in India has grown rapidly in villages and greater number of banks have established their presence in villages through BCs. Over FY18-22, banking outlets in villages through BCs has increased by 33.9% CAGR, compared to 31.9% CAGR rise in total banking outlets in villages. Moreover, by the end of FY22, almost 98% of banking outlets in villages were through BC.

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