Axis Bank to raise Rs 940 crore through preferential allotment by September 24

As part of fund raising programme, the country’s third largest private sector lender, Axis Bank, is planning to to raise about Rs 940 crore through preferential allotment of 1.08 crore shares to its promoters by September 24.

The bank is also proposing that a maximum of 7.14 crore shares to be issued through preferential allotment or QIP or GDR for funding its core Tier I capital. Post preferential allotment, the bank could issue up to 6.06 crore shares through GDR or QIP.

At the current market price of Rs 870.55 per share, the bank is expected to mobilise about Rs 940 crore from its promoters through preferential allotment.

In the backdrop of the current economic environment, there is need to maintain a higher level of Tier I equity or core capital which is seen to reflect capital strength, Axis Bank said in a filing on the Bombay Stock Exchange. Earlier this month, board of the bank had cleared proposal of share allotment and is seeking shareholders? nod through postal ballot.

The preferential allotment is proposed to be made to promoters LIC, General Insurance Corporation, New India Assurance Company, Oriental Insurance Company, United India Insurance and National Insurance Company, it said.

However Specified Undertaking of the Unit Trust of India (SUUTI), the largest shareholders in the bank, is not participating in the preferential allotment.

Thus, the shareholding of the SUUTI would come down to 22.54 % post allotment from the exiting 27.02% . However, LIC would retain 10.34% stake by subscribing 73 lakh shares of the bank while General Insurance Corporation is expected to be alloted 15.9 lakh shares. The other four public sector non-life insurers would together get 18.4 lakh shares.

Shares of Axis Bank closed at Rs 894.65 on BSE on Wednesday.

The bank has also sought shareholders’ nod on the renumeration offered to its managing director and CEO Shikha Sharma. According to the proposal, Sharma will get over Rs 1.75 crore as salary and allowances towards entertainment, house rent and upkeep of her residence. She will also be provided loan facilities totalling Rs 51 lakh by the bank, besides fully-furnished accommodation, office car and telephone among other benefits, the filing said. She assumed office at Axis Bank in June this year, but her remuneration is yet to be ratified by the shareholders,who have now been asked to either approve or reject the proposal by September 8.