MUMBAI: The fifth largest private sector lender Indusind Bank on Tuesday said its board approved a Rs 3,288-crore fund raising plan through a preferential issue.
Under the proposed issue, the bank will allot 6.275 crore equity shares at a price of Rs 524 per share to a set of marquee investors and the promoters, subject to shareholders and other necessary approvals.
Managing director & chief executive Sumant Kathpalia told reporters during a post-earnings concall that this is the first time in over four years that the bank is raising capital and clarified that the fund raising has nothing to do with the pandemic.
The bank will hold an extraordinary general meeting of its shareholders to consider the preferential issue on August 25, it said in a regulatory filing.
Kathpalia said of the total planned fund raising, the promoters will contribute Rs 792 crore – Indusind International Holdings subscribing 94,13,661 shares for Rs 493 crore and Hinduja Capital snapping up 57,03,816 crore shares for Rs 299 crore at Rs 524 a share.
The other investors are Route One Fund (Rs 375 crore), Route One Offshore Master Fund (Rs 560 crore), ICICI Prudential Life (Rs 850 crore), Tata Investment Corporation (Rs 300 crore), and AIA Company (Rs 410 crore), aggregating to the issuance of over 4.76 crore equity shares on preferential basis at Rs 524 per share for Rs 2,496 crore.
Describing the preferential allotment as an expression of confidence in the lender by the promoters and investors, Kathpalia said the bank is already well-capitalised with a CRAR of 15.3 per cent as of June 2020, which will go up to 16.5 per cent post the fund raising. In June 2019 the total capital adequacy ratio (CAR) under the Basel III was 14.90 per cent.
Of the CAR of 15.3 per cent, tier 1 is 14.49 per cent as against 14.47 per cent in June 2019. Risk-weighted assets were at Rs 2,61,722 crore in June 2020 compared to Rs 2,31,094 crore in June 2019.
The bank will use this capital to continue to invest in liabilities and asset franchise, technology and infrastructure platforms, to expand reach, product offerings and to improve customer experience, while ensuring sustainable financial parameters, Kathpalia said.
“We thank our existing shareholders for their continued trust and support and welcome our new shareholders. This capital raise from long-term, foreign as well as domestic investors, is strategic for us as this helps us bolster the balance-sheet and position the bank well, as the economy gradually navigates out of the pandemic.
“The capital raise also reflects the continued support and confidence that the promoters have in the bank,” he added.
Morgan Stanley and Citigroup Global Markets India act as financial advisors, and S&R Associates will act as legal counsel to the bank for the issue.
The Indusind counter gained over 4 per cent to Rs 526.90 on the BSE, whose benchmark rallied 1.5 per cent.