The Securities and Exchange Board of India (SEBI) has held back its approval to the proposed initial public offering of private-sector lender RBL Bank (formerly Ratnakar Bank), as per a public note by the capital markets regulator.
SEBI, which was examining a past violation by the private equity-backed bank, said it has kept the IPO application in abeyance. This is a rare instance where the regulator has held back from approving an issue, although it has not rejected the plan.
While some draft proposals for public offers take time to get a green signal as the firms clarify SEBI’s queries, this is one of the few in the last few years where the regulator has kept a proposal in abeyance.
The proposed issue was under SEBI's scanner for months. In an update on pending IPO clearances, SEBI didn’t specify the nature of the violations by the bank that were under consideration.
RBL Bank spokesperson declined to comment on the development.
SEBI had also sought clarifications from the bank in September.
RBL, which is backed by several private equity firms, had in June this year applied for raising up to Rs 1,100 crore ($162 million) through a fresh issue of shares in addition to an offer for sale by some shareholders. The proposed IPO would have led to a complete exit for one of its private equity investors, Beacon India Private Equity Fund. The company, which counts several other PE shareholders, also planned to provide a part-exit to Gaja Capital and Capvent as part of the offer for sale.
RBL Bank, which had acquired the business banking, credit cards and mortgage portfolios of Royal Bank of Scotland, has been on a capital-raising spree with Rs 328 crore raised in 2014 from investors as part of a new round.
In February 2013, the bank raised $60.64 million from a group of investors including Aditya Birla PE, International Finance Corp, IDFC Alternatives and Ascent Capital, among others, which valued it around $511 million, according to VCCEdge, the data research platform of VCCircle.
The bank, which is one of the smallest in terms of loan book, has 183 branches across 13 states and plans to expand its capital base from the planned fundraise.
For the financial year ended on March 31, 2015, it had total income of Rs 2,356 crore with a net profit of Rs 207 crore. During the fiscal, its deposits grew to Rs 17,099 crore and advances rose to Rs 14,449 crore. As on March 31, 2015, the bank’s capital adequacy ratio under Basel III stood at 13.13 per cent.
Catholic Syrian Bank Ltd is another private-sector lender waiting to go public. It has already received SEBI’s approval for the issue.