Private sector lender ING Vysya Bank, in which the Dutch financial major ING group holds 43.35 per cent stake, has raised Rs 970 crore through a qualified institutional placement and a preferential allotment to the promoters. The issue saw the banks raise Rs 513 crore from qualified institutional buyers, which also included a domestic private equity firm, by selling 10 per cent stake. The rest Rs 457 crore were raised through a preferential allotment to its Amsterdam-headquartered parent ING Group, which has maintained its stake after the issue.
Enam Securities, IDFC Capital and JM Financial Consultants were managers to the issue. The share price of ING Vysya closed at a discount to its QIP price at Rs 325 on Friday, down 1.34 per cent.
ING Vysya’s chief financial officer Jayant Mehrotra told CNBC that the bank would be well-capitalised for the next two years with this issue. According to Mehrotra, in addition to mutual funds, FIIs and insurance companies, a domestic private equity fund had also participated in the issue. The bank had earlier attracted private equity interest, withChrysCapital exiting profitable from its investment during late 2009.
Private equity interest in the Indian banking sector is on the rise again as there had been several deals in the space this year. Mid-market regional bank Ratnakar has recently raised Rs 720 crore from India’s largest mortgage lender HDFC Ltd and a consortium of private equity investors including Norwest Venture Partners, Beacon India Private Equity Fund and others. A private equity consortium also picked up 19.6 per cent stake in Dhanlaxmi Bank for Rs 290 crore last month.
ING Vysya Bank reported 32 per cent increase in net profit for FY11 at Rs 318.7 crore, as compared to Rs 242.2 crore in the previous year. The total income of the bank grew by 17 per cent to Rs 1,661.5 crore, with net interest income up by 21 per cent to Rs 1,006.5 crore.
Bangalore-based ING Vysya Bank is headed by MD & CEO Shailendra Bhandari, who joined in 2009 after quitting as head of Tata Capital’s private equity business. Prior to that, he was heading PE-controlled Centurion Bank of Punjab, which was acquired by HDFC Bank in 2007.
ING Vysya Bank Ltd was formed when the erstwhile Vysya Bank Ltd and ING merged in October, 2002. As of March, 2011, the bank had 510 branches, 28 satellite offices and 400 ATMs.
ING had announced a restructuring plan to separate banking and insurance operations as a part of its agreement with the European Commission in 2009. Incidentally, ING sold its US online bank for $9 billion to Capital One Financial Corp on Friday. The firm also plans to spin off and take its insurance operations to the public market across Asia and Europe.
ING holds 26 per cent stake in ING Vysya Life Insurance, in which other shareholders are Exide Industries and veteran investment banker Hemendra Kothari.