IIHL also raised the debt by pledging some shareholding of IndusInd Bank for acquisition or strategic investment to convert itself into a listed operating entity outside India by the first week of September 2021
Mumbai: IndusInd International Holdings Ltd. (IIHL), the promoter entity of IndusInd Bank, has completed raising capital through a rights issue. The company raised the capital at an overwhelming premium of 1,400% towards the subscription of the rights issue, it said in a statement to the stock exchanges.
Under a rights issue, a company allows only existing shareholders to participate in the fundraise.
Interestingly, IIHL also said it has raised the debt by pledging some shareholding of IndusInd Bank for acquisition or strategic investment to convert itself into a listed operating entity outside India by the first week of September 2021.
The private sector lender had issued convertible warrants to its promoters and its subsidiary IndusInd Ltd on 6 July 2019 for a total amount of ₹2,695.26 crore for 1,57,70,985 share warrants. The promoters had paid ₹673.82 crore towards subscription of 25% warrants at ₹1,709 per share.
Last month, the Securities and Exchange Board of India (Sebi) allowed an additional two weeks to the bank’s promoters to infuse the residual capital with regard to conversion of warrants issued to them last year of over ₹2,695 crore. The deadline was extended to 18 February.
“This reiterates the confidence of IIHL's global shareholders, spread across 34 countries, in the decision of IIHL and its subsidiary, IndusInd Ltd, to redeem the balance of 75% of the warrants at the price of ₹1,709 per share (a huge premium over the current market price of ₹1,059), aggregating to Rs. 2,021.45 crore," the statement added.
Additionally, to support the redemption of warrants, IIHL said it has decided to monetise some of the other mature, non-core investments.
“The funds from this divestment and the rights issue will be remitted on or before 18 February, as permitted by Sebi," it said.
Once the promoters infuse this additional capital into IndusInd Bank, their stake would touch 15%. “This decision by IIHL to redeem the warrants at a premium over the prevailing share price stands testimony to the strong trust and confidence in IndusInd Bank's management and its strategic direction," it said.
In fact, IIHL said its board has always been desirous of increasing its stake in IndusInd Bank to 26%. Under extant regulations, promoters can hold up to 15% stake in a private bank and only in November last year, an internal working group set up by the central bank proposed raising it to 26%.
In another statement, it said the promoters have pledged 42.7 million shares or 5.6% of the equity with Catalyst Trusteeship Ltd. However, it was not disclosed as to how much was raised through this process.
Shares of the bank were trading around ₹1,049 on the BSE on Wednesday, down 0.91% from its previous close.