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Business News/ Companies / News/  IDFC First Bank board approves plan to raise 3,200 cr via preferential issue
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IDFC First Bank board approves plan to raise ₹3,200 cr via preferential issue

IDFC First Bank will be issuing 39.68 crore shares to LIC, HDFC Life Insurance, Aditya Birla Sun Life Insurance, Bajaj Allianz Life Insurance, ICICI Lombard General Insurance and SBI General Insurance.

The bank will utilize this capital for future growth opportunities with high asset quality. (Mint)Premium
The bank will utilize this capital for future growth opportunities with high asset quality. (Mint)

Mumbai: IDFC First Bank Ltd. on Thursday said its board approved a proposal to raise 3,200 crore through a preferential allotment of shares. The private sector lender will be issuing 39.68 crore shares to marquee investors at a price of 80.63 per share, IDFC First Bank said in an exchange filing.

The proposed issue price is at a premium of 4.51% to the last closing of 77.15, prior to the board meeting.

The proposed allottees include Life Insurance Corporation of India, HDFC Life Insurance, Aditya Birla Sun Life Insurance, Bajaj Allianz Life Insurance, ICICI Lombard General Insurance and SBI General Insurance.

Also Read: HDFC Life Insurance stock valuation needs a growth agent

Post this issue, LIC would have the largest stake in the lender at 2.68%, followed by HDFC Life Insurance at 1.31% and Aditya Birla Sun Life Insurance at 1.06%.

As much as 47% of the proposed issue will be subscribed to by the state-run LIC.

Use of capital

The bank will utilize this capital for future growth opportunities with high asset quality.

“After our last capital raise of 3,000 crore, the RBI had raised the risk weights on consumer credit exposures in November 2023, which consumed around 1% of the bank's capital. Hence, this capital is being raised prudently for future growth of the bank while factoring the new risk weightages," said the bank.

Also Read: LIC stock is available at a discount. So why aren’t investors piling in?

Post this, the book value per share would increase by 4.11% to 47.36 as the fundraise is at a price higher than the current BVPS, based on March 31, 2024 numbers.

IDFC First Bank reported a net profit of 724.35 crore for the quarter ended 31 March, down from 802.62 crore during the corresponding period last year.

Net interest income (NII) grew 24% from 3,597 crore in Q4FY23 to 4,469 crore in Q4FY24.

Also Read | Mint Explainer: What does RBI’s record dividend payout to the government mean?

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ABOUT THE AUTHOR
Gopika Gopakumar
Gopika is a Senior Assistant editor based in Mumbai, covering banks, shadow banks and Reserve Bank of India for the last seventeen years. She started her career as a Television journalist with CNBC-TV18, before joining Mint. Her expertise lies in breaking exclusive stories.
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Published: 30 May 2024, 09:27 PM IST
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