RBL Bank to raise Rs 826 cr via preferential allotment to five investors

Board agrees to allot 24.24 mn shares at Rs 340.70 apiece; RBL had already told shareholders at AGM that it would raise equity capital up to Rs 3,500 cr

Private sector lender RBL Bank is raising Rs 825.79 crore in equity capital from five investors by issuing shares through preferential allotment. The investors are Bajaj Finance, East Bridge Capital Master Fund I, FEG Mauritius FPI, Ward Ferry Management-controlled hedge fund WF Asian Reconnaissance Fund, and Asia-focused stock hedge fund lshana Capital.

The bank’s board has agreed to allot 24.24 million shares at Rs 340.7 a piece on a private-placement basis in accordance with the provisions of the Companies Act, 2013, and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.

On July 9, RBL Bank told shareholders at its annual general meeting that it would raise equity capital not exceeding Rs 3,500 crore.

As on September 30, the bank’s capital adequacy ratio had slipped from 13.7 per cent to 12.3 per cent in the same period a year ago.

In the second quarter (Q2) of 2019-20 (FY20), the asset quality of the bank also worsened as its gross non-performing loans spiked 95 per cent to Rs 1,539 crore from Rs 789.21 crore in the same period a year ago.

The bank’s gross bad loan ratio nearly doubled to 2.6 per cent from 1.38 per cent during the period and its profit also slipped 73 per cent to Rs 54 crore.

The bank’s provisions and contingencies rose 281.8 per cent to Rs 533.3 crore in Q2FY20 over Q2FY19. The provision coverage ratio was 58.45 per cent in Q2FY20 as against 69.45 per cent in Q2FY19.

The bank had said, “Given the difficult corporate credit environment, the bank faced challenges in a few corporate accounts. As a matter of prudence, the bank took higher-than-required provision on these accounts, impacting our bottom line.”

The bank’s stock came under pressure because of this. It tanked from a 52-week high of Rs 716.4 in May this year to a 52-week low of Rs 230.55 on October 23. Its stock closed 1.9 per cent lower at Rs 373.8 per share on Friday.

The bank informed the stock exchanges that it had appointed Ranjana Agarwal additional and independent director on its board from Saturday, for five years, subject to shareholder approval.