Axis Bank announced on Friday that it that had received commitments from a clutch of investors including Bain Capital Private Equity and Life Insurance Corporation of India (LIC) for capital infusion of Rs 11,626 crore through a preferential allotment of equity shares and warrants. The country’s third largest private sector bank proposes to raise Rs 9,063 crore through the issue of new shares and the remaining Rs 2,563 crore via an issue of warrants. This would lead to a share dilution of 8.23% for existing shareholders, it said. Entities affiliated with Bain Capital propose to invest Rs 6,854 crore that accounts for almost 4.8% stake in the lender. LIC proposes to invest Rs 1,583 crore. The insurance giant is a current promoter of the bank, holding a 13.82% stake. According to an investment banker, the fresh round of stake purchase by LIC will maintain its shareholding in Axis Bank at current levels.
Axis Bank proposes to issue 17.26 crore equity shares on a preferential basis at a price of Rs 525 per share and 4.53 crore warrants convertible into equity shares at a price of Rs 565 per share, adding Rs 43.60 crore in the paid-up capital of the bank. At present, promoters hold a 30.35% stake in the bank. Apart from LIC, UTI is one of the promoters, holding 11.46% in the lender. The Axis Bank stock ended Friday’s session at Rs 544.50 on the BSE, up 0.72% from its previous close. So far this year, the stock has risen by 21%. The bank’s market capitalisation stood at Rs 1.3 lakh crore on Friday. The other investors include the likes of Integral Investments South Asia IV, New World Fund, Capital Group New World Fund (LUX), EuroPacific Growth Fund and American Funds Insurance Series. The funds will bolster the capital adequacy of the bank and provide growth capital for the core business of the bank and its subsidiaries, Axis Bank indicated in a release.
Once approved, this would be one of the largest private equity investments in the Indian banking sector. Axis Bank MD and CEO Shikha Sharma said the lender is honoured by the faith reposed by marquee investors like Bain Capital and its promoter LIC in the long-term strategy of the bank. “We are excited about the opportunities this growth capital creates for us,” she added. The fund-raising is subject to shareholders’ approval at the extraordinary general meeting of the bank to be held on December 8. While Axis Bank was advised exclusively by Axis Capital, Bain Capital was advised exclusively by JPMorgan on the transaction.