IDFC First Bank Weighs $200 Million Share Sale to Boost Capital
A customer counts Indian one-hundred rupee banknotes in India. (Photographer: Dhiraj Singh/Bloomberg)

IDFC First Bank Weighs $200 Million Share Sale to Boost Capital

(Bloomberg) -- IDFC First Bank Ltd. is considering a $200 million share sale to bolster its capital, people familiar with the matter said, as the lockdown in India raises the risk of loan defaults.

The private-sector lender is waiting for the five-week lockdown to end before firming up the route for fundraising, the people said, asking not to be identified because the information is private. The lender might consider a sale of new shares to institutional investors among other options, the people said.

IDFC Bank, which got a banking permit in 2015, is joining peers including Kotak Mahindra Bank Ltd., Yes Bank Ltd., and IndusInd Bank Ltd. with plans to tap the capital market. The bank’s capital adequacy ratio was 13.3% at the end of December, most of which was core equity.

No final decision has been taken on the share sale, and the timing ultimately depends on the impact of the coronavirus outbreak on the business, the people said. As well as bolstering its capital, the new share issue would position the bank for growth once the lockdown ends, one of the people said.

A representantive for IDFC First Bank declined to comment. In a regulatory filing on Tuesday, the bank said a capital raising via preferential allotment will be discussed at a board meeting on Friday.

Shares of the Warburg Pincus-backed lender have dropped more than 50% this year and were trading at 22 rupees apiece in Mumbai on Tuesday. The nine-stock Bankex Index has dropped 36% in 2020.

©2020 Bloomberg L.P.

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