Skip to main content

Axis Bank to sell 9% to Bain Capital, others to raise Rs 11,625 crore


The board of Axis Bank on Friday approved stake sale to private equity player Bain Capital and other investors in its bid to raise capital by issue of equity linked securities on a preferential basis.





The board of Axis Bank on Friday approved a 9 percent stake sale to Bain Capital and other investors including LIC in its bid to raise capital worth Rs 11,626 crore by issue of equity of equity linked securities on a preferential basis.
The issue price of equity Shares at Rs 525 per share while the issue price of convertible warrants is Rs 565 per share. Entities affiliated with Bain Capital propose to invest Rs. 6,854 crore while LIC or Life Insurance Corporation will be issued around 3.02 crore equity shares on a preferential basis to help the bank raise over Rs 1,583 crore, the bank said.
Approved by the Board today, Axis Bank proposes to raise Rs 9,063 crore through issuance of equity and the remaining Rs 2,563 crore through issue of warrants.
The capital raise is subject to shareholders’ approval at the EGM (extraordinary general meeting) of the Bank to be held on December 8, 2017.

“The Board of Directors of the Bank will be convened on 10th November 2017, to consider raising of funds by issue of equity / equity linked securities through permissible mode at an appropriate time…In this connection, we would like to inform that the Board of Directors of the Bank at its meeting held today has approved the raising of funds by issue of equity shares and convertible warrants on a preferential basis,” Axis Bank said in filing on the stock exchanges.

Key takeaways:

— Issue Price Of Equity Shares At Rs 525/share
— Issue Price Of Convertible Warrants At Rs 565/Share
— Axis Bank Board Approves Raising Up To Rs 11,625 Cr Via Equity & Warrant Issue
— Fund Raising Involves Sale Of 9% Stake
— Investors Include Bain Capital Asia Investment, Integral Investment South Asia New World Fund, Capital Group New World Fund, American Funds Insurance and EuroPacific Growth Fund
— LIC To Also Be Issued Equity Shares On Preferential Basis
— Axis Bank Board To Convene EGM To Get Shareholder Nod For Preferential Allotment Via Special Resolution
Investors
BC Asia Growth Investments, the investment entities of Bain Capital will be investing along with seven other investors including Integral Investments South Asia, New World Fund, Capital Group New World Fund.
Shikha Sharma, MD and CEO, Axis Bank said, “We are honoured by the faith reposed by marquee investors including Bain Capital and our Promoters LIC in the long term strategy of the Bank. We are excited about the opportunities this growth capital creates for us.”
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 capitalisation of Axis Bank, and the interest shown by marquee investors, positions us for even greater strength.”
Capital strength
The capital raised will bolster the capital adequacy ratio (CAR), thereby providing growth capital for the core business of the Bank and its subsidiaries. The CAR of the bank stands at 16.32 percent as on September end.
Once approved, this would be one of the largest private equity investments in the Indian banking sector.
The Bank proposes to issue 172,630,639 or 17.26 crore equity shares on preferential basis at a price of Rs 525 per share (at a premium of 2.4 percent to the SEBI Floor Price as of the relevant date), and 45,357,385 or 4.53 crore warrants convertible into equity shares at a price of Rs 565 per share (at a premium of 10.2 percent to the SEBI Floor Price as of the relevant date), adding Rs 43.6 Crores in the paid up capital of the Bank.
This would entail a dilution of 8.23 percent for existing shareholders, the bank said.
At present, the promoters (Specified Undertaking of Unit Trust of India, or SUUTI) own 30.35 percent while foreign portfolio investors, including the Government of Singapore Investment Corp and Abu Dhabi Investment Authority, hold 49.13 percent. Foreign investors can automatically own up to 5 percent in a bank in India, which with RBI approval can go up to 10 percent.
Last month, it was reported that Axis Bank, which is country’s third-largest private sector bank, was in advanced talks with private equity player Bain capital, amidst worsening asset quality and regulatory glare.
Axis Bank performance
In its financial results in October, Axis Bank reported worse than expected performance on bad loans for the fiscal second quarter July-September, with fresh corporate slippages at Rs 8,110 crore.  Gross NPAs in absolute terms were at Rs 27,402 crore rising 3.12% from 2.02% in the same quarter a year ago. Provisions in the quarter were at Rs 3,886 crore.
Axis Bank was advised exclusively by Axis Capital Ltd and Bain Capital was advised exclusively by JP Morgan on this transaction. Legal advisors to Axis Bank were Shardul Amarchand Mangaldas and Bain Capital was advised by AZB & Partners.
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, led by Shikha Sharma, 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.”

Comments

Post a Comment

Popular posts from this blog

THE NIFTY FUTURE  Basics of the Index Futures Within the Indian derivatives world, the Nifty Futures has a very special place. The ‘Nifty Futures’ is the most widely traded futures instrument, thus making it the most liquid contract in the Indian derivative markets. In fact you may be surprised to know that Nifty Futures is easily one of the top 10 index futures contracts traded in the world. Once you get comfortable with futures trading I would imagine, like many of us you too would be actively trading the Nifty Futures. For this reason, it would make sense to understand Nifty futures thoroughly. As we know the futures instrument is a derivative contract that derives its value from an underlying asset. In the context of Nifty futures, the underlying is the Index itself. Hence the Nifty Futures derives its value from the Nifty Index. This means if the value of Nifty Index goes up, then the value of Nifty futures also goes up. Likewise if the value of Nifty Index declines
Post a Comment
Read more
 Mutual Funds Basics WHAT ARE MUTUAL FUNDS: A mutual fund is an investment vehicle, which pools money from investors with common investment objectives. It then invests their money in multiple assets, in accordance with the stated objective of the scheme. The investments are made by an ‘asset management company’ or AMC. For example, an equity fund would invest in stocks and equity-related instruments, while a debt fund would invest in bonds, debentures, etc. As an investor, you put your money in financial assets like stocks and bonds. You can do so by either buying them directly or using investment vehicles like mutual funds. In this segment, we will understand mutual funds and how to trade in them. History of mutual funds in India Mutual funds in India have come a long way since 1964 when the Unit Trust of India was the only player. By the end of 1988, UTI had total assets worth Rs 6,700 crore. Soon after, eight funds were established by banks, LIC and GIC between
Post a Comment
Read more
CALL OPTIONS BASICS Breaking the Ice The options market makes up for a significant part of the derivative market, particularly in India. I would not be exaggerating if I were to say that nearly 80% of the derivatives traded are options and the rest is attributable to the futures market. Internationally, the option market has been around for a while now, here is a quick background on the same – Custom options were available as Over the Counter (OTC) since the 1920’s. These options were mainly on commodities Options on equities began trading on the Chicago Board Options Exchange (CBOE) in 1972 Options on currencies and bonds began in late 1970s. These were again OTC trades Exchange-traded options on currencies began on Philadelphia Stock Exchange in 1982 Interest rate options began trading on the CME in 1985 Clearly the international markets have evolved a great deal since the OTC days. However in India from the time of inception, the options market was facilita
Post a Comment
Read more