RBL Bank to Raise $209 Million With Preference Share Sale
The bank joins financial peers in tapping the equity market to raise capital as the Covid threatens to push up defaults.
(Bloomberg) -- RBL Bank Ltd. plans to raise 15.66 billion rupees ($209 million) by issuing shares to five investors, including Maple II BV, ICICI Prudential Life Insurance Co. and CDC Group Plc.
The bank’s board approved the issuance of about 88.5 million preferential shares at 177 rupees a share, according to an exchange filing on Thursday. That’s about 4% lower than their closing price on Wednesday.
Maple II BV, which is indirectly owned by funds affiliated to Baring Private Equity Asia, will subscribe to 56.4 million shares and hold 9.45% stake in the bank after the offering, according to the filing. Other investors include Gaja Capital Fund and its affiliate Gaja Trustee Co. Ltd.
RBL Bank joins financial peers from IDFC First Bank Ltd. to L&T Finance Holdings Ltd. in tapping the equity market to raise capital as the coronavirus outbreak threatens to push up defaults. The bad-loan ratio in India’s banking sector are forecast to rise to a two-decade high by March 2021.
Capital Buffers
Shares of RBL Bank fell as much as 3% in Mumbai after the announcement. They had risen earlier in the day after Bloomberg reported the capital raising plans.
The Indian private sector lender plans to use the proceeds from the sale to improve capital buffers and boost lending over the coming year once the pandemic eases, according to a person familiar with the matter who asked not to be named.
RBL’s core equity ratio, the key gauge for provisioning and lending potential, was at 15.16% end-June compared with a minimum regulatory requirement of 8%, filings show.
©2020 Bloomberg L.P.