Mumbai: RBL Bank Ltd will sell its shares to the public in a three-day offer starting 19 August, becoming the country’s first private bank to go public in more than a decade.

The bank has set a price band of 224-225 for the issue, which will raise up to 1,211.2 crore at the lower end of the band. This includes a fresh issue of shares worth 832.5 crore and a sale of 16.90 million shares worth  378.5 crore by existing shareholders.

The fund-raising aims to raise the bank’s capital base for growth and comply with incremental capital needs under the Basel-III norms as well as Reserve Bank of India norms.

The last private sector bank to launch an initial public offering (IPO) in India was Yes Bank Ltd, which raised 315 crore in July 2005. In 2010, state-owned Punjab and Sind Bank Ltd managed to raise 480 crore in its IPO.

At a press conference to announce the IPO in Mumbai, Arundhati Bhattacharya, chairperson of State Bank of India (SBI), said the market is looking for good issues and RBL will have “very good attraction". She was at the conference as a representative of SBI Capital Markets, one of the managers to the issue.

In 2015-16, RBL reported a revenue of 3,234.85 crore, up from 2,356.49 crore a year ago and a profit of 296.8 crore, up from 208.45 crore a year ago.

The bank’s income grew at an annual rate of 50% compounded over the last five years. Its return on equity has also doubled in the past five years, according to data made available in the issue documents. “We are not driven by past business models. Business model evolution in all segments is going to be driven by a decrease in regulation, non-traditional competition, technology evolvement and more choices to consumers," said Rajeev Ahuja, head strategy of RBL Bank.

RBL has 197 branches and 362 ATMs across 16 states. Its shares are valued at 2.2 times price-to-book (P/B) on historical value.

Kotak Mahindra Capital Co. Ltd, Citigroup Global Markets India Pvt. Ltd, Axis Capital Ltd, Morgan Stanley India, ICICI Securities Ltd, IIFL Holdings Ltd, IDFC Securities Ltd, SBI Capital Markets Ltd are managing the share sale.

RBL had filed its draft prospectus on 23 June 2015, which was cleared after 13 months.

The Securities and Exchange Board of India (Sebi) had withheld approval as RBL had in the past issued securities to more subscribers than permitted under The Companies Act, 2013.

In its draft prospectus, RBL Bank disclosed that in 2003 and 2006, it issued shares to more than 200 subscribers. The previous board had allotted shares via rights issues to 2,591 investors on 19 February 2003. It further allotted shares to 1,969 investors through another rights issue on 21 February 2006, according to risk factors highlighted by the company in its draft prospectus. These share issues do not comply with the new rules.

In December, Sebi said any offer or allotment of securities will be considered a public issue if the number of allottees exceeds 200 persons in a fiscal under the Companies Act, 2013, as against the cap of 49 persons provided in the Companies Act, 1956.

As per the 2013 Act, if there are more than 49 investors and up to 200 investors, a firm has the option of refunding investors with interest and no penal action will be taken. However, even after the amendment, RBL’s past issuances continued to be in violation of norms as it had issued shares to more than 200 people.

In the third quarter of fiscal 2016, the bank raised 487.5 crore in a pre-IPO allotment to institutional investors, selling 25 million shares at 195 each. Institutions participating in the offering included CDC Group PLC, DVI Fund (Mauritius) Ltd, Rimco (Mauritius) Ltd and Asian Development Bank.

Over the past three years, global and local private equity and development funds have invested more than 1,400 crore in the bank in three tranches.

Housing Development Finance Corp. Ltd (HDFC), Norwest Venture Partners, Samara Capital, Beacon Capital, Faering Capital, TVS Shriram, Cartica Capital, Ascent Capital, Aditya Birla Private Equity, IDFC’s Spice Fund and ICICI’s Emerging India Fund are among its shareholders.

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