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Ratnakar Bank raising $54M in another round of PE funding 

The unlisted private bank is backed by names like HDFC, Norwest Venture Partners, Beacon India PE, TVS Capital & Samara Capital, among others.

Ratnakar Bank is set for another round of fresh equity infusion in which the unlisted private bank is expected to raise around Rs 300 crore ($54 million) from a few existing investors, as well as from new investors, sources told VCCircle. The deal is expected to be complete by March 2013.

The Kolhapur-based bank already counts 10 players as its investors and the future deal will involve multiple players, similar to its last deal.

In early 2011, Ratnakar Bank raised equity funding from India’s largest mortgage lender HDFC Ltd and a consortium of private equity investors including Norwest Venture Partners, Beacon India Private Equity Fund, Cartica Capital, Faering Capital, Gaja Capital Partners and Samara Capital, among others. The bank raised Rs 720 crore through the issue.

Around the same time, Chennai-headquartered TVS Shriram Growth Fund, a private equity fund managed by TVS Capital, also picked up stake in the bank as part of the PE consortium that invested in the regional bank.

“We are being approached by new PE players for further equity infusion, but it is too early to comment,” said Rajiv Ahuja, head of strategy and financial markets at Ratnakar Bank. He added that the next round of funding would be complete by March 2013 and the deal value would be far less than its consortium funding of Rs 720 crore ($163 million) in 2011.

When contacted, Samara Capital, one of the existing investors, refused to comment on the development. Calls to Beacon Capital and Gaja Capital also went unanswered till the time of posting this article.

The bank’s capital adequacy ratio currently stands at 18 per cent, well above the mandatory requirement of 9 per cent. In its half-yearly results declaration, the bank reported a total business of around Rs 10,100 crore, up from Rs 6,400 crore in the same period last year. The net profit improved to Rs 44 crore in the half-year ending in September 2012, up from Rs 30 crore last year.

The bank, which is aspiring for a pan-India presence, has 115 branches and has recently signed a distribution agreement with Reliance Mutual Fund and SBI Mutual Fund. Trade income, branch income and income from treasury activities also contribute a huge chunk to the bank’s other income. The net interest margin (NIM) stands at 3.5 per cent.

According to media reports, the bank is planning to go public with an IPO by 2014.

According to a VCCircle study, banks, which count private equity investors among its shareholders, outperformed its peers for the year ended March 2012. These banks had trimmed the proportion of non-performing assets (NPAs) on their balance sheets, improved the return on assets and outgrew the rest of the banking sector in terms of both deposit and advances (or loan) growth during FY12 (See).

(Edited by Sanghamitra Mandal)

Norwest Venture Partners is a venture capital and private equity firm with approximately $5 billion assets under management. It provides seed, early, expansion, growth and late stage capital to listed and unlisted companies operating in United States, India, Israel and China. The firm seeks to invests in retail, technology, education, media and entertainment, financial, logistics, healthcare, consumer, infrastructure, manufacturing, telecom, pharma and outsourced service sectors. It typically invests between $1 million and $30 million for venture capital and between $10 million and $100 million for growth capital in its portfolio companies. The company was founded in 1961 and is based in California, United States of America with additional offices in India and Israel. 

(Baer Capital Partners)

Beacon India Managers Ltd. is a private equity firm with $350 million assets under management. It provides growth capital to companies operating in India. The firm seeks to invest in infrastructure, consumer services, business services, financial services, healthcare, manufacturing, fast moving consumer goods, food and beverage, hospitality, media, telecom, education, retail, travel, offshore services and real estate sector. It typically invests between $5 and $25 million in its portfolio companies with an initial investment between $10 and $20 million. The company was founded in 2006 and is based in Mauritius.

TVS Capital Funds Ltd. is a private equity firm with $146 million assets under management. It provides growth-stage capital and late stage capital to companies operating in India. The firm seeks to invest in cleantech, retail, restaurants, healthcare, facility management services, education, media and entertainment, micro-finance, water treatment, mobile and agricultural sectors. The company was founded in 2007 and is based in Chennai, Tamil Nadu.