Mumbai: The Hinduja Group-promoted IndusInd Bank Ltd plans to raise $75-100 million (around Rs366-489 crore) through a qualified institutional placement, or QIP, involving an equity dilution of 10-15%. The Hindujas own a 25.63% stake in the lender that would be diluted by 3.5-4%.
According to ownership guidelines of the Reserve Bank of India, the banking regulator, no single entity can hold more than 10% of a bank and the net worth of a lender should be at least Rs300 crore. The promoters would move closer to meeting the norms after the QIP.
A QIP is the sale of securities including equity shares to a qualified institutional buyer. In the past, IndusInd Bank raised capital through the sale of global depository receipts, or GDRs, including around Rs220 crore last year and Rs147 crore in 2007.
“Now we are keen to explore the qualified institutional placement route as this is the most transparent way to raise funds,” said Romesh Sobti, managing director and chief executive officer, IndusInd Bank.
The bank’s senior management has been conducting roadshows and meeting investors globally. Sobti met investors in London and Hong Kong. IndusInd is in the process of appointing a merchant banker.
“To maintain the growth rate of 25-30% the bank would need capital and we would like to raise the funds sooner than later,” added Sobti. The bank’s capital adequacy ratio, a measure of financial strength expressed as the ratio of capital to risk-weighted assets, as of 30 June was 12.14%.
The bank’s net profit for the June quarter more than quadrupled to Rs86.50 crore from Rs19.10 crore a year ago. The bank’s ratio of non-performing assets dipped to 1.01% from 2.14%. It restructured loans worth Rs76 crore, compared with Rs2 crore in the corresponding period last year.
The bank had exposure of Rs25 crore to Maytas Infrastructure Ltd, the firm promoted by the Raju family, whose head B. Ramalinga Raju confessed in January to having cooked the books of Satyam Computer Services Ltd to the tune of at least Rs7,136 crore.