Capital SFB IPO Basis of Allotment

CAPITAL SMALL FINANCE BANK LIMITED

Our Bank was incorporated as Capital Local Area Bank Limited'on May 31,1999 at Phagwara district Kapurthala. Punjab, as a public limited company under the Companies Act, 1956, and was granted a certificate of incorporation by the Registrar of Companies. Punjab, Himachal Pradesh and Chandigarh. The name of our Bank was Subsequently changed to ‘Capital Small Finance Bank Limited' pursuant to a shareholders' resolution dated April 2.2016, to reflect the change in status of our Bank from a local area bank to a small finance bank pursuant to the Reserve Bank of India approval dated March 4,2016, and a fresh certificate of incorporation was granted by the Registrar of Companies, Punjab and Chandigarh at Chandigarh ("RoC") on April 15.2016. Our Bank commenced its business pursuant to a certificate of commencement of business issued by the Registrar of Companies. Punjab. Himachal Pradesh and Chandigarh dated August 12,1999. For further details, see 'History and Certain Corporate Matters" on page 243 of the Prospectus dated February 10.2024 ("Prospectus") filed with the RoC.

Our Bank has filed the Prospectus with the RoC and the Equity Shares are proposed to be listed on the Main Board of the Stock Exchanges and the trading will commerce on Wednesday, February 14, 2024.

INITIAL PUBLIC OFFER OF 11,176,713 EQUITY SHARES OF FACE VALUE OF Rs. 10 EACH ("EQUITY SHARES") OF CAPITAL SMALL FINANCE BANK LIMITED ("BANK" OR "ISSUER") FOR CASH AT A PRICE OF Rs. 468 PER EQUITY SHARE (INCLUDING,i A SHARE PREMIUM OF Rs. 458 PER EQUITY SHARE) ("OFFER PRICE"), AGGREGATING TO Rs. 5,230.70 MILLION (THE "OFFER"), COMPRISING A FRESH ISSUE OF 9,615,384 EQUITY SHARES AGGREGATING TO Rs. 4,500.00 MILLION (THE "FRESH ISSUE") AND AN OFFER FOR SALE OF 1,561,329 EQUITY SHARES AGGREGATING TO Rs. 730.70 MILLION (THE "OFFER FOR SALE"). COMPRISING 836,728 EQUITY SHARES AGGREGATING TO Rs. 391.59 MILLION BY OMAN INDIA JOINT INVESTMENT FUND II ("OIJIF II"), 151,153 EQUITY SHARES AGGREGATING TO Rs. 70.74 MILLION BY AMICUS CAPITAL PRIVATE EQUITY I LLP ("ACPE"). 17,544 EQUITY SHARES AGGREGATING TO Rs. 8.21 MILLION BY AMICUS CAPITAL PARTNERS INDIA FUND I ("ACPIF", TOGETHER WITH ACPE, "AMICUS". AND TOGETHER WITH ,ACPE, AND OIJIF II, THE "INVESTOR SELLING SHAREHOLDERS"). AND 555,904 EQUITY SHARES AGGREGATING TO Rs. 260.16 MILLION BY CERTAIN PERSONS LISTED IN THE PROSPECTUS (THE "OTHER SELLING SHAREHOLDERS") (THE INVESTOR SELLING SHAREHOLDERS AND THE OTHER SELLING SHAREHOLDERS, COLLECTIVELY, THE "SELLING SHAREHOLDERS", AND SUCH EQUITY SHARES OFFERED BY THE SELLING SHAREHOLDERS, THE "OFFERED SHARES").

1. Our business is concentrated in North India, with approximately 86.13% of our total branches i.e., 149 branches out of a total of 173 branches, as of September 30,2023 are located in the state of Punjab.

2. Our business is currently significantly dependent on banking operations in rural and semi- urban areas and contribute 76.80% of our total number of Depositors for the six months period ended September 30,2023.

3. Our sector wise outstanding gross advances and the proportion of these advances to our outstanding advances as on September 30,2023 is set out below:

Any deterioration in the performance of any of these sectors in which we have significant exposure may adversely affect our financial condition, results of operations and cash flows.

4. As at six months ended September 30,2023 and September 30,2022 and Fiscals ended March 31,2023,2022 and 2021, our gross NPAs as a percentage of gross advances were 2.73%, 2.60%, 2.77%, 2.50% and 2.08% and our provision coverage ratio was 50.96%, 48.62%, 51.48%, 46.02% and 46.14%, respectively while for the peers it ranges from 50.50% to 96.00%.

5. As of December 31, 2023, we had total indebtedness of Rs. 5,295.10 million, which comprised of secured borrowings of ^ 2,657.80 million and unsecured borrowings Rs. 2,637.30 million.

6. The changes in market interest rates may affect the interest rates we charge on our interest-earning assets differently from the interest rates we pay on our interest-bearing liabilities. Our Net Interest Income is significantly dependent on our average performing advances for a particular period and our Net Interest Margin which is the difference of interest earned and interest expended divided by the Average Total Assets. Our Net Interest Income as percentage of net total income is 85.40%, 87.27%, 86.68%, 82.49% and 81.25% for the period ended September 30,2023 and September 30,2022 and for the year ended March 31,2023, March 31,2022 and March 31,2021.

7. We have experienced negative cash flows in prior years. Our cash flows for the six months ended September 30, 2023 and September 30, 2022 and the Fiscals ended 2023,2022 and 2021 are set forth in the table below:

8. We are involved in certain legal proceedings initiated by our Bank involving an aggregate amount of Rs. 633.89 million and a proceeding against our Bank involving an amount of Rs. 12.21 million. Any adverse developments related to these proceedings could adversely affect our reputation, business and cash flows.

9. Our Cost to Income Ratio was 62.35%, 61.23%, 59.97%, 63.42% and 70.76% for the six months ended September 30, 2023 and September 30, 2022 and the Fiscals ended March 31,2023,2022 and 2021 respectively. An increase in the Cost to Income Ratio due to inefficient business management or otherwise will adversely affect our financial condition, results of operations and cash flows.

10. Our Bank has settled a matter with SEBI in the past in connection with allotment of Equity Shares during the Financial Year 2004-2005 to more than 49 investors which were considered not in compliance with the then applicable laws relating to issuance and allotment of securities. The matter was subsequently settled and compounded by our Bank by way of a settlement order dated June 10, 2022 passed by SEBI and the compounding order dated November 26, 2021 issued by the National Company Law Tribunal, Chandigarh bench.

11. We have experienced negative cash flows in prior years. Our cash flow for six months ended September 30,2023 and September 30,2022 and the Fiscals ended 2023,2022 and 2021 were negative.

12. RBI, vide email dated September 13, 2023, has found our current Statutory Auditors, M/s T R Chadha & Co., LLP, Chartered Accountants, ineligible for reappointment for Financial Year 2024, and has directed our Bank to recommend the name of another firm meeting the eligibility criteria prescribed under the ‘Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs)' dated April 27,2021.

13. The Offer Price of our Equity Shares, our market capitalization to Total Income and our Price to Earning ratio at Offer Price may not be indicative of the market price of the Equity Shares after the Offer.

*pre money

14. The Weighted Average Cost of Acquisition of all Equity Shares transacted in last three years, 18 months and one year preceding the date of the Prospectus:

''As certified by M/s VP Bhalla & Associates, by way of certificate dated February 10,2024.

15. Since there were no primary issuances or secondary transactions during the 18 months preceding the date of filing of the Prospectus, the information has been disclosed for price per share of our Bank based on the last five primary issuances or secondary transactions where our Promoters, our Promoter Group, Selling Shareholders or Shareholder(s) having the right to nominate director(s), are a party to the transaction, not older than three years prior to the date of filing of the RHP irrespective of the size of the transaction.

‘excluding transmission

16. The three BRLMs associated with the Offer have handled 58 public issues in the past three Financial Years and until the date of the Price Band advertisement, out of which 15 issues closed below the Offer price on the listing date.

* Issues handled where there were common BRLMs.

** Pursuant to order passed by Hon'ble National Company Law Tribunal, Mumbai Bench dated April 27, 2023, the merchant banking business of Edelweiss Financial Services Limited has demerged and now transferred to Nuvama Wealth Management Limited and therefore the said merchant banking business is part of Nuvama Wealth Management Limited.

The Offer was made through the Book Building Process, in terms of Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957, as amended ("SCRR") read with Regulation 31 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 ('SEBI ICDR Regulations') and in compliance with Regulation 6(1) of the SEBIICDR Regulations, wherein not more than 50% of the Offer was made available for allocation on a proportionate basis to Qualified Institutional Buyers ("QIBs") ("QIB Portion"). Our Bank, in consultation with the BRLMs, allocated up to 60% of the QIB Portion to Anchor Investors on a discretionary basis in accordance with the SEBI ICDR Regulations ( "Anchor Investor Portion"), of which one-third was reserved for domestic Mutual Funds, subject to valid Bids having been received from domestic Mutual Funds at or above the Anchor Investor Allocation Price. In the event of under-subscription, or non-allocation in the Anchor Investor Portion, the balance Equity Shares were added to the Net QIB Portion. Further, 5% of the Net QIB Portion (excluding the Anchor Investor Portion) was made available for allocation on a proportionate basis only to Mutual Funds, and the remainder of the Net QIB Portion was made available for allocation on a proportionate basis to all QIBs, including Mutual Funds, subject to valid Bids having been received at or above the Offer Price. Further, not less than 15% of the Offer was made available for allocation on a proportionate basis to Non-institutional Bidders of which (a) one third was reserved for applicants with application size of more than Rs. 200,000 and up to Rs. 1,000,000; and (b) two third was reserved for applicants with application size of more than { 1,000,000. provided that the unsubscribe portion in either of such sub-categories was allocated to applicants in the other sub-category of Non-institutional Bidders, and not less than 35% of the Offer was made available for allocation to Retail Individual Bidders (RIBs") in accordance with the SEBI ICDR Regulations, subject to valid Bids having been received at or above the Offer Price. Anchor Investors are not permitted to participate in the Offer through the ASBA process. For details, see "Offer Procedure" on page 435 of the Prospectus.

The bidding for Anchor Investor opened and closed on February 6, 2024. The Bank received 19 applications from 13 anchor investors for 37,18,144 Equity Shares. The Anchor investor price was finalized at Rs. 468 per Equity Share. A total of 33,53,013 Equity Shares were allocated under the Anchor Investor Portion aggregating to Rs. 1,56,92,10,084.

The Issue received 2,73,798 applications for 3,68,05,184 Equity Shares (prior to rejections) resulting in 3,2930 times subscription. The details of the applications received in the Offer from various categories are as under; (before rejections):

Final Demand

A summary of the final demand as per BSE and NSE as on the Bid/Offer Closing Date and as at different Bid prices is as under:

The Basis of Allotment was finalized in consultation with the Designated Stock Exchange, being the BSE, on February 12,2024.

A. Allotment to Retail Individual Bidders (after rejections) (including ASBA Applications)

The Basis of Allotment to the Retail Individual Bidders, who have bid at the Cut-Off Price or at the Offer Price of Rs. 468 per Equity Share, was finalized in consultation with the BSE. This category has been subscribed to the extent of 2,6208 times. The total number of Equity Shares Allotted in Retail Portion is 39,11,850 Equity Shares to 1,22,245 successful Retail Individual Bidders. The category-wise details of the Basis of Allotment are as under:

B. Allotment to Non-lnstitutional Bidders (more than 10.20 million and up to Rs. 1.00 million) (after rejections) (including ASBA Applications)

The Basis of Allotment to the Non-institutional Investors (more than Rs. 0.20 million up to Rs.1 million), who have bid at the Offer Price of Rs. 468 per Equity Share or above, was finalized in consultation with BSE. This category has been subscribed to the extent of 5.3978 times. The total number of Equity Shares allotted in this category is 5,58,836 Equity Shares to 1,247 successful applicants. The category-wise details of the Basis of Allotment are as under:

C. Allotment to Non-institutional Bidders (more than Rs. 1.00 million) (after rejections) (including ASBA Applications)

The Basis of Allotment to the Non-institutional Investors (more than Rs.1 million), who have bid at the Offer Price of Rs. 468 per Equity Share or above, was finalized in consultation with BSE. This category has been subscribed to the extent of 3.4645 times. The total number of Equity Shares allotted in this category is 11,17,671 Equity Shares to 1,458 successful applicants. The category-wise details of the Basis of Allotment are as under: (Sample)

D. Allotment to QIBs (after rejections)

Allotment to QIBs, who have Bid at the Offer Price of Rs. 468 per Equity Share or above, has been done on a proportionate basis in consultation with the BSE. This category has been subscribed to the extent of 6.84 times of QIB Portion. As per the SEBI ICDR Regulations. Mutual Funds were Allotted 5% of the Equity Shares of QIB Portion available i.e., 1,11,768 Equity Shares and other QIBs were Allotted the remaining available Equity Shares i.e., 21,23,575 Equity Shares on a proportionate basis. The total number of Equity Shares Allotted in the QIB Portion is 22,35,343 Equity Shares, which were allotted to 27 successful QIB Investors. The category-wise details of the Basis of Allotment are as under:

E. Allotment to Anchor Investors (after rejections)

The Bank, in consultation with the BRLMs, have allocated 33,53,013 Equity Shares to 13 Anchor Investors (through 19 Applications) at the Anchor Investor Offer Price of Rs. 468 per Equity Share in accordance with the SEBI ICDR Regulations. This represents 60% of the QIB Portion.

The IPO Committee of our Bank on February 12, 2024 has taken on record the Basis of Allotment of Equity Shares approved by the Designated Stock Exchange, being BSE and has allotted the Equity Shares to vanous successful Bidders. The Allotment Advice-cum- Intimations and/or notices have been dispatched to the address of the investors as registered with the depositories. Further, the instructions to the Self Certified Syndicate Banks for unblocking of funds, transfer to Public Issue Account have been issued on February 12, 2024 and payment to non-Syndicate brokers have been issued on February 13, 2024. In case the same is not received within ten days, investors may contact the Registrar to the Offer at the address given below. The Equity Shares Allotted to the successful Allottees have been uploaded on February 13, 2024 for credit into the respective beneficiary accounts subject to validation of the account details with the depositories concerned. The Bank has filed the Listing application with BSE and NSE on February 13. 2024. The Bank has received listing and trading approval from BSE and NSE and the trading will commence on or about February 14, 2024.

Note: All capitalised terms used and not specifically defined herein shall have the same meaning as ascribed to them in the Prospectus.

INVESTORS PLEASE NOTE

The details of the Allotment has been hosted on the website of the Registrar to the Offer. Link Intime India Private Limited at www.linkintime.co.in.

All future correspondence in this regard may kindly be addressed to the Registrar to the Offer quoting full name of the first/ sole Bidder. Bid cum Application Form number. Bidder DP ID. Client ID, PAN, date of submission of Bid cum Application Form, address of the Bidder, number of Equity Shares applied for. the name and address of the Designated Intermediary where the Bid cum Application Form was submitted by the Bidder and a copy of the Acknowledgment Slip received from the Designated Intermediary at the address given below.

Link Intime India Private Limited

C-101, 1st Floor, 247 Park, Lai Bahadur Shastri Marg

Vikhroli (West), Mumbai - 400 083. Maharashtra. India

Tel: +91 810 811 4949

E-mail: capitalsfb.ipo@linkmtime.co.in

Website: www.linkintime.co.in

Investor Grievance ID: capitalsfb.ipo@linkintime.co.in

Contact Person: Shanti Gopalkrishnan

SEBI Registration Number: INR000004058

THE LEVEL OF SUBSCRIPTION SHOULD NOT BE TAKEN TO BE INDICATIVE OF EITHER THE MARKET PRICE OF THE EQUITY SHARES ON LISTING OR THE BUSINESS PROSPECTS OF CAPITAL SMALL FINANCE BANK LIMITED

CAPITAL SMALL FINANCE BANK LIMITED has filed the Prospectus with RoC on February 10. 2024. The Prospectus is available on the website of SEBI at www.sebi.gov.in. on the websites of the Stock Exchanges i.e. BSE and NSE at www.bseindia.com and www.nseindia.com, respectively, on the website of the Bank at www.capitalbank.co.in and on the websites of the BRLMs i.e. Nuvama Wealth Management Limited (Formerly known as Edelweiss Securities Limited), DAM Capital Advisors Limited and Equirus Capital Private Limited at www.nuvama.com, www.damcapital.in and www.equirus.com. respectively. Any investors should note that investment in equity shares involves a high degree of risk and for details relating to such risk, please see the section titled 'Risk Factors' on page 27 of the Prospectus. Bidder should not rely on the DRHP filed with SEBI, instead investors should rely on Prospectus filed with SEBI. for making any investment decisions.

This announcement is not an offer of securities for sale in the United States or elsewhere. The Equity Shares offered in the Offer have not been, and will not be. registered under the U.S. Securities Act of 1933. as amended (the "U.S. Securities Act") and may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to. the registration requirements of the U S. Securities Act and applicable state securities law. The Equity Shares are being offered and sold only outside the United States in "offshore transactions" as defined in and in reliance on Regulation S under the U.S. Securities Act. There will be no offering of Equity Shares in the United States.