Mumbai: Private sector lender RBL Bank Ltd, on Saturday, said it has approved raising of ₹825.79 crore worth equity capital by way of preferential allotment to five investors.
The bank’s board has agreed to allot 24.24 million shares at ₹340.70 apiece to Bajaj Finance Ltd, foreign institutional investors East Bridge Capital Master Fund I and FEG Mauritius FPI Ltd, along with Ward Ferry Management Ltd-managed hedge fund WF Asian Reconnaissance Fund and Asia-focused stock hedge fund, lshana Capital, the bank said in an exchange filing. The shares were issued at a 9.8% discount to the bank’s ₹374.15 closing price on Friday.
On 25 November, Mint reported that the bank has appointed ICICI Securities, IIFL Securities and IDFC Securities as advisers to raise up to ₹2,000 crore through a qualified institutional placement (QIP) offering. 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. A source had told Mint at the time that the fund raising will be a combination of preferential issue, along with a QIP for public market investors.
The development follows RBL Bank's 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 same period a year ago.
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.
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.
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.