Mumbai: Private lender RBL Bank Ltd is looking to raise up to 2,000 crore through a qualified institutional placement (QIP) offering, three people aware of the development said, requesting anonymity.

“The bank has appointed ICICI Securities, IIFL Securities and IDFC Securities as advisers to the transaction. The roadshows have already happened in the US, Europe and Asia markets and the timing of the QIP launch will be decided soon," said one of the persons cited above. “The bank is in the process of negotiating with some marquee investors and may go for a preferential issue if the talks fructify."

QIP is a tool used by listed companies to sell shares, debentures, or any securities, other than warrants that are convertible into stocks, to a qualified institutional buyer such as mutual funds and foreign institutions.

The development follows RBL Bank announcement to shareholders at its annual general meeting on 9 July that it would raise equity capital not exceeding 3,500 crore. The bank had a capital adequacy ratio of 12.3% as of 30 September, falling from 13.7% in the last fiscal.

Between July-September, the bank’s asset quality also worsened as its gross non-performing loans jumped 95% to 1,539 crore from 789.21 crore in the same period last year. As a percentage of total loans, its gross bad loans ratio nearly doubled to 2.6% from 1.38% during the period while profit fell 73% to 54 crore. That put the bank’s stock under pressure as it tanked from a 52-week high of 716.40 on NSE in May this year to a 52-week low of 230.55 on 23 October.

“The bank’s stock has not performed well and that has made raising equity capital quite difficult as the dilution would be much higher at its current price. It is most likely that the bank would do a preferential issue, along with a QIP for public market investors. But a full QIP is also possible if the investor interest remains weak," said the second of the three people cited above.

On 22 November, CNBC TV18 reported that RBL Bank was in talks with a strategic investor, Bajaj Holdings & Investment and two private equity firms- ChrysCapital and Blackstone, for the proposed share sale, which could help it raise about 2,000 crore to shore up its capital base.

While IIFL did not respond to an emailed query, ICICI Securities and IDFC Securities declined to comment.

Responding to an emailed query, a spokesperson for RBL Bank said, “The query is speculative in nature and as a matter of policy, we do not comment on it."

In 2017, the bank had raised 1,680 crore of equity capital by selling 32.6 million shares for 515 apiece on a preferential basis to its existing investors, UK’s development finance institution CDC Group Plc, HDFC Standard Life Insurance, ICICI Lombard General Insurance, Steadview Capital Mauritius and Multiples Private Equity, among others.

The 76-year-old bank, which was historically concentrated in south-west Maharashtra and northern Karnataka, has grown to become a pan-India lender with a network of 346 branches and 394 ATMs, serving over 7.3 million customers.

As of October, eight companies have raised 22,312.87 crore through QIPs, exceeding the 16,587.43 crore raised by 25 firms in the full year 2018, according to primary market tracker Prime Database.

Recently, consumer lending firm Bajaj Finance Ltd mopped up 8,500 crore through private placements to qualified institutional investors. Subscribed over five times its size, the QIP received interest from foreign institutional investors including BlackRock, Nomura and Singapore’s sovereign wealth fund, GIC.

In September, private lender Axis Bank Ltd raised 12,500 crore in India’s second-largest QIP from domestic institutions and large foreign investors, including GIC, Goldman Sachs, Fidelity, Nomura, T Rowe Price and BlackRock. In August, another private lender, Yes Bank Ltd raised 1,930.46 crore through a QIP. In 2017, State Bank of India had raised 15,000 crore in the nation’s largest QIP.

Close