In one of the largest private equity investments in the Indian banking sector, Axis Bank, the third largest private sector bank in India, has decided to raise equity and equity-linked capital of Rs 11,626 crore from a set of investors including entities affiliated with Bain Capital Private Equity and the bank’s promoter Life Insurance Corporation. Entities affiliated with Bain Capital propose to invest Rs 6,854 crore and LIC proposes to invest Rs1,583 crore, the bank said on Friday.
The bank proposes to raise Rs 9,063 crore through issuance of equity and the remaining Rs 2,563 cr through issue of warrants. The bank has received approval for the capital mobilisation from its board of directors on Friday. Axis bank shares rose by 0.72 per cent to Rs 544.50 on Friday.
The bank proposes to issue 1.72 crore equity shares on preferential basis at a price of Rs 525 per share (at a premium of 2.4 per cent to the SEBI floor price as of the relevant date) and 4.5 crore warrants convertible into equity shares at a price of Rs 565 per share (at a premium of 10.2 per cent to the SEBI floor price), adding Rs 43.6 crore to the paid up capital of the bank. This would entail a dilution of 8.23 per cent for existing shareholders.
“The capital raised will bolster the capital adequacy of the bank, thereby providing growth capital for the core business of the bank and its subsidiaries. Once approved, this would be one of the largest private equity investments in the Indian banking sector,” it said.
Sanjiv Misra, Chairman, Axis Bank said, “banking in India is at an inflection point right now. The credit growth trajectory in the country is turning. Axis is well positioned to participate in this development. This significant capitalization of Axis Bank, and the interest shown by marquee investors, positions us for even greater strength.”
Stephen Pagliuca, Co-Chairman of Bain Capital, said “in India’s banking industry we believe reach, scale and analytics driven underwriting will become increasingly important. Axis Bank’s leadership team is very well positioned to take advantage of the same, in what promises to be an exciting growth phase for private sector banks in the country. We are particularly excited about Axis Bank’s strong and differentiated retail franchise that we believe will be an important driver of future growth.”
The bank reported a profit of Rs 432.38 crore, compared with Rs 319.08 crore a year ago and Rs 1,305.60 crore a quarter ago. Its gross NPAs rose to Rs 27,402.32 crore as of September from Rs16,378.65 crore a year ago and Rs 22,030.87 crore in Q1.