In what could be a major boost to Axis Bank, the private lender’s board has approved a plan to raise as much as Rs 11,625 crore through issue of equity shares and convertible warrants to investors including Bain Capital and others. The board of Axis Capital has approved a 9% stake sale to Bain Capital and other investors in its bid to raise capital by issue of equity of equity linked securities on a preferential basis. Axis bank will issue 5.56 crore preference shares to Bain Capital Asia Investments, 3.19 crore preference shares to Integral Ivestment South Asia IV and also 4 crore convertible warrants to Bain Capital Asia Investments III on a preferential basis.
In all, the bank seeks to issue 17.26 crore equity shares to investors (including promoters) at Rs 525 per share. Further, India’s third largest lender will issue 4.53 crore warrants in total at Rs 565 per warrant. Notably, Life Insurance Corporation (LIC) will also be issued around 3.02 crore equity shares on a preferential basis to raise over Rs 1,500 crore. Axis Bank had informed the exchange earlier this week that it will hold board meeting on Friday for approval of fund raising. In a notice to the stock exchanges, Axis Bank said on Tuesday that it would consider raising funds through equity, or equity-linked securities, at an appropriate time once the board gives its approval.
The announcement comes close on the heels of a government decision to recapitalise public sector banks to the tune of Rs 2.11 lakh crore over the next two years. Earlier this month, 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.
Post its second quarter earnings, the bank had reported that the RBI wasn’t happy with its classification of nine large corporate accounts as standard assets. As a result, the non-state-owned bank, the country’s sixth-largest by market value, had decided to rebrand the entire $750 million as nonperforming.