Home / Industry / Banking /  Japan's Nippon Life, AXA eye strategic investment in IndusInd Bank

MUMBAI: Private lender IndusInd Bank Ltd is in discussions with at least three strategic investors, including Japan's Nippon Life and Europe's AXA Group, as the bank plans to raise more than $500 million to shore up its balance sheet, said two people aware of the development.

The talks with these strategic investors follows the bank's earlier efforts to tap financial players such as private equity (PE) and pension funds and sovereign investors for fundraising.

Mint had reported on 6 April that IndusInd Bank was in talks with Canada’s largest pension fund manager, Canada Pension Plan Investment Board (CPPIB), and Singapore’s state investor, GIC, among others, for capital infusion. Investment banks Citi and Morgan Stanley are advising IndusInd Bank on the fundraise.

"They are in discussions with at least three groups including Nippon Life and Europe's insurance and asset management major AXA. These talks are at an initial stage and no non-binding bids have been submitted yet by these strategic investors," said one of the people cited above, requesting anonymity.

The bank now seeks strategic investors since the talks with PE funds and other financial investors did not receive much traction, the person said.

An investment in IndusInd Bank will help Nippon Life strengthen its distribution network through bancassurance, the person added.

Emails sent to Nippon Life and IndusInd Bank did not elicit a response. AXA declined to comment.

The fundraising talks come at a time when the private lender's stock has seen a sharp valuation erosion and its financials have also been under pressure. IndusInd Bank's stock has lost over 70% of its value since the start of the calendar year, 2020.

Last month, the bank reported a net profit of 301.84 crore for the three months to March, down 16% year-on-year (yoy), owing to rise in provisions, which rose 56% yoy to 2,440 crore in Q4FY20.

The bank’s gross bad loan ratio, or its bad loans expressed as a percentage of total loans, increased 35 basis points (bps) yoy to 2.5% in Q4FY20. However, the net bad loan ratio fell by 30 bps y-o-y owing to an increase in provisions. Its provision coverage ratio (PCR) rose to 63.3% in January-March, from 43.04% a year ago.

The bank management said it does not expect to see more than 80 bps increase in its gross non-performing assets (NPA) and 50 bps in credit cost because of the covid-19 impact.


Swaraj Singh Dhanjal

" Based in Mumbai, Swaraj Singh Dhanjal is responsible for Mint’s corporate news coverage. For the past eight years he has been writing on the biggest deals in private equity, venture capital, IPO market and corporate mergers and acquisitions. An engineer and an MBA, he started his journalism career in 2014 with Mint. "
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