QIP is a tool used by listed companies to sell shares, debentures, or any other security, other than warrants that are convertible into stocks, to qualified institutional buyers such as mutual funds and foreign institutions.
Mint reported on 25 November that RBL planned to raise funds through the QIP route. Back then a person had said, requesting anonymity, that the fundraising will be a combination of a preferential issue and a QIP for public market investors.
RBL told the stock exchanges that its board had approved a floor price of ₹352.57 apiece for the share sale. On Monday, RBL Bank shares closed at ₹373.25 per share, down 0.15%.
The lender aims to raise up to ₹2,000 crore through the QIP, said one person aware of the bank’s fundraising plans, requesting anonymity.
The QIP follows RBL’s announcement on Saturday that it will raise ₹825.79 crore through preferential allotment to five investors, including Bajaj Finance Ltd, foreign institutional investors East Bridge Capital Master Fund I and FEG Mauritius FPI Ltd, besides Ward Ferry Management Ltd-managed hedge fund WF Asian Reconnaissance Fund and Asia-focused stock hedge fund, lshana Capital.
These fundraising exercise follow 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 on 30 September, a drop from 13.7% in the year-ago period.
Between July and September, the bank’s asset quality had worsened with gross non-performing loans increasing from ₹789.21 crore in the corresponding period of last year 95% to ₹1,539 crore in the second quarter of 2019-20.
As a percentage of total loans, the lender’s gross bad loans ratio nearly doubled from 1.38% to 2.6% in the period under consideration, while profit fell 73% to ₹54 crore. This put the bank’s stock under pressure as it tanked from a 52-week high of ₹716.40 on the National Stock Exchange in May to a 52-week low of ₹230.55 on 23 October.