Baring Private Equity Asia will become the biggest shareholder of India’s mid-sized private-sector lender RBL Bank by picking up a 9.45% stake in the latest fundraising cycle worth Rs 1,566 crore ($210 million).
It has decided to invest almost Rs 1,000 crore ($133 million) in the bank through a preferential allotment of shares, according to a filing to the stock exchanges.
The bank will issue 8.85 crore shares via the preferential allotment to investors at a price of Rs 177 apiece, the filing said.
Homegrown private equity firm Gaja Capital will return as a shareholder to invest around Rs 150 crore for a 1.42% stake, while UK-based development finance institution CDC Group will pick up 48.9 lakh shares for Rs 86.55 crore. CDC already holds around 5.5% stake in RBL Bank.
ICICI group arm ICICI Prudential Life Insurance Co. Ltd will pick up 1.87 crore shares to own 3.13% stake.
The fundraising, approved by the bank’s board on Thursday, will bump up capital adequacy ratio to 18.6% and Tier-I capital to 17.4% (from 16.4% and 15.2% as of June-end 2020).
RBL Bank’s shares ended Thursday’s trade at Rs 182.1 apiece, down 1.43% on the BSE.
In December, the lender had mobilised around Rs 2,700 crore ($360 million) through a combination of preferential issue and qualified institutional placement which saw participation from Bajaj Finance, Bajaj Allianz, Eastbridge, Ward Ferry and Falcon Edge.
In April, VCCircle reported that India-focused private equity firm ChrysCapital had bought a stake of 2.09% in RBL Bank.
Ratnakar Bank, which was established in 1943, renamed itself as RBL Bank in 2014 and went public two years later. It has a diversified shareholder base with 29% of its stake held by retail investors and 36% by foreign investors such as CDC Group Plc.
The Maharashtra-based lender is among several banks tackling the impact of the pandemic on the loan book.
Over the last six months, RBL Bank’s shares have dropped around 40% due to the pandemic and the debacle of Yes Bank which underwent a rescue led by State Bank of India.
As a fallout of the Yes Bank crisis, RBL Bank’s several customers also withdrew their deposits which shrunk 2% in the June quarter that saw a marginal fall in advances.
Gross non-performing assets (NPAs) and net NPA ratio also worsened to 3.45% and 1.65% as on June-end 2020 from 1.38% and 0.65%, respectively, a year earlier.
As a result, RBL Bank set aside provisions worth Rs 500 crore for the June quarter, a substantial jump from Rs 197 crore a year earlier. Its net profit declined 47% year-on-year to Rs 141 crore.