Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / News/  IndusInd Bank raises Rs4,300 crore via QIP
BackBack

IndusInd Bank raises Rs4,300 crore via QIP

The QIP will be followed by a preferential issue for the bank's promoters which will be completed within the next 30 days

Photo: MintPremium
Photo: Mint

Mumbai: Private sector bank IndusInd Bank Ltd has raised more than Rs4,300 crore by selling fresh shares to institutional investors through a qualified institutional placement (QIP), two people with direct knowledge on the deal said.

The QIP will be followed by a preferential issue for the bank’s promoters which will be completed within the next 30 days and could lead to a further capital infusion of close to Rs800 crore, one of the persons said.

Both persons requested anonymity because details of the issue have not yet been posted on stock exchanges.

“The total amount raised by the bank will be more than Rs5,100 crore," said the person cited above, adding that demand for the QIP, which opened late on Thursday night, was very strong.

“The bank manged to collect more than 2.5 times the amount. We got bids of $1 billion in the first hour itself and the final collection was about $1.8 billion (more than Rs11,000 crore) against our need of about $680 million," said the person cited above.

The bank could not immediately be reached for comment.

In a notice to the Bombay Stock Exchange (BSE) on Monday, IndusInd Bank said the floor price for the issue was set at Rs821.54 per share and that the bank will offer a discount of not more than 5% to the floor price.

However, the bank did not have to offer a discount because of the strong demand, particularly from domestic institutional investors, the second person said.

“We sold the shares at a 3% premium to the floor price. The final price was around Rs845 per share. Together with foreign institutional investors, there was strong demand from domestic institutional investors as well," the second person said.

The final price was still at a discount to IndusInd’s closing price on Tuesday. The bank shares gained 1.48% to close at Rs872.05 per share on Tuesday on BSE, while the benchmark Sensex gained 0.49% to close at 27780.83 points.

The share sale to institutions is the first by the Hinduja Group-promoted bank since November 2012, when it raised Rs2,000 crore through a similar share sale to domestic and international institutional investors.

IndusInd Bank promoters will keep their stake at 15% by putting in fresh capital after taking approval from shareholders through a postal ballot to be announced shortly, the first person said.

It is not as if the bank is in desperate need of capital—its capital adequacy ratio stands at 12.09% as of March 2015, much higher than the 9% mandated by the Reserve Bank of India. Capital adequacy is an indicator of a bank’s financial strength, expressed as a ratio of capital to risk-weighted assets.

“It was not as if the bank needed the capital immediately but we were advised by the bankers that this was a good window to go through. We missed the Greece crisis by just a day," said the first person, referring to the volatility in the global financial markets this week on the possibility of a default by Greece.

Seven investment banks, six foreign and one domestic, managed the share sale: Citigroup Inc., Credit Suisse AG, CLSA Ltd, Morgan Stanley, JP Morgan Chase and Co., Goldman Sachs Group Inc and JM Financial Ltd.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 30 Jun 2015, 06:53 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie