Axis to raise Rs 5k cr through equity sale
BANK LIKELY TO DILUTE 15-17% THROUGH A MIX OF GDRS, QIPS, PREFERENCE ISSUANCE TO PROMOTERS AXIS Bank, the country’s third-largest private sector bank, is planning to raise around Rs 5,000 crore through a fresh round of equity offerings. The money could be raised through a mix of global depository receipts, qualified institutional placements and a preferential issuance to its promoters. In 2007, the bank had raised $1.05 billion (around Rs 4,217 crore) through an equity offering. The latest move will be the first big issuance by a large bank after the financial crisis. Speaking to ET, Axis Bank MD & CEO Shikha Sharma said: “Growth is coming back in the economy and we want to be well capitalised. We don’t want to keep going back to investors. Though we have taken an enabling resolution of 20%, we many end up with an equity dilution of around 15-17%. A final decision will be taken closer to the issuance.” The bank board, which met on Tuesday, passed an enabling resolution that will allow the bank to raise up to 20% of the present paidup capital, or 7.14 crore equity shares. The bank scrip closed at Rs 894.65 on Monday, down 2.92%, on BSE. The capital adequacy ratio of the bank as of June 30 was at 15.28% with tier I capital at 9.39%. The bank aims to ramp up the tier-I capital to above 11%. In case of ICICI Bank, the tier-I capital is as high as 13.1%. Internationally, banks are looking to shore up their tier-I capital post the financial crisis. Axis Bank has appointed MM Agrawal, till now the executive director in charge of corporate banking, as its deputy managing director, a newly-created post. The grapevine has it that the bank is also in the process of bringing in Srinivasan Varadarajan, MD and head of treasury of JPMorgan India, as the new ED in charge of corporate banking. The promoters currently hold around 42.21% stake in the bank. Of this, Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI) owns 27.02% stake, LIC 10.34% while other general insurance companies hold the remaining stake. On the question on how much stake would be taken by the promoters, Ms Sharma said: “ We are talking to the promoters. It’s at very early stages.” SUUTI, however, is unlikely to commit additional capital. LIC too will face hurdles in investing, as it would require clearance from both IRDA and RBI. Incidentally, the bank had raised $1.05 billion (around Rs 4,217 crore) through an equity issuance in 2007. It had raised the money through a mix of QIP, preferential issue to its promoters and GDR. It raised $218.07 million through GDRs, another $436 million (Rs 1,752 crore) through QIP and around $396 million (Rs 1,588 crore) through a preferential issue. The bank had priced its issuance at Rs 620. At that time SUUTI and LIC had picked up their portion of the preferential issuance. On where the money will be used, Ms Sharma said: “The bank has presence in both corporate and retail banking. It has seen decent growth. There will be opportunities in both retail and corporate banking.” --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
