Axis Bank To Raise Rs 11,625 Crore From Bain Capital, Others
Bain Capital arms will invest close to Rs 6,400 crore in Axis Bank.
Axis Bank Ltd. today approved raising Rs 11,625.8 crore by issuing shares and warrants to Bain Capital Private Equity and other investors as the private lender strengthens its capital base amid rising bad loans.
The bank will issue shares at Rs 525 apiece and warrants at Rs 565. The fundraise, after issuing new stock and conversion of warrants, will dilute its equity by 8.3 percent, according to BloombergQuint’s calculations. Warrants will be converted within 18 months, while shares will have a one-year lock-in period, Axis Bank said in a statement to exchanges.
Bain Capital will invest close to $1.05 billion (Rs 6,853.8 crore) for a 4.8 percent stake in one of the largest private equity investments in the Indian banking sector. Capital International will pump in about $489.4 million (Rs 3,188.7 crore) to own 2.3 percent on conversion of warrants. LIC will invest $243 million (Rs 1,583.3 crore). The insurer’s stake will, however, decline by about a percentage point to 13.7 percent due to dilution of equity.
The capital raised will bolster the capital adequacy of the bank, thereby providing growth capital for the core business of the bank and its subsidiaries.Axis Bank Statement
“We are honoured by the faith reposed by marquee investors including Bain Capital and our promoters LIC in the long-term strategy of the bank,” Shikha Sharma, managing director and chief executive officer of Axis Bank, said in a media statement. “We are excited about the opportunities this growth capital creates for us.”
The fund-raise comes as Axis Bank said—second time in two quarters—that it had underreported non-performing loans after the central bank pointed out a Rs 5,633 crore divergence in calculation for the year ended March. The private lender’s bad loans have surged more than sixfold since the Reserve Bank of India asked banks to recognise soured assets in a review two years ago.
The promoter group held 30.35 percent stake in Axis Bank, while the government’s Specified Undertaking of Unit Trust of India owned 12.71 percent as of September 30. LIC and five other government-owned insurers hold 18.2 percent. Foreign portfolio investors like Abu Dhabi Investment Authority, the Government of Singapore and the Vanguard Group own 49.13 percent.
The capital raise is subject to shareholders’ approval at the extraordinary general meeting of the bank to be held on December 8.
Axis Capital Ltd. exclusively advised Axis Bank and JP Morgan advised Bain Capital on the transaction. Shardul Amarchand Mangaldas and AZB & Partners were the respective legal advisers.