The board of IDFC FIRST Bank has approved raising up to Rs 7,500 crore from two investors, Warburg Pincus and Abu Dhabi Investment Authority, according to a notification to the exchanges. This will be by way of issuing compulsorily convertible preference shares.
The two investors include Currant Sea Investments BV, an affiliate of Warburg Pincus, and Platinum Invictus, an affiliate of ADIA.
The bank will allot 81.26 crore and 43.71 compulsorily convertible preferential shares at Rs 60 per piece each to both marquee investors, Currant Sea and Platinum Invictus, respectively.
While Currant Sea will invest Rs 4,876 crore, Platinum Invictus will park Rs 2,624 crore in the bank. Post the transaction, Currant Sea will hold a 9.48% stake in the bank, and Platinum Invictus will own a 5.10% stake in the bank.
The preferential issue is subject to the approval of the shareholders, Reserve Bank of India and Competition Commission of India, as may be required.
The rationale behind this fundraising is that the bank plans to scale up its optimal profitability and aims to grow the overall loan book at 20% for the next few years, the bank said in an investor presentation.
"To enable such a scale-up, the bank is raising the required capital for growth. The large fundraise will increase the capital adequacy and reduce the need for frequent fundraising at the bank," it said.
This high capital adequacy will position the IDFC FIRST Bank for strong and profitable growth. Post the fundraising, the bank's capital adequacy ratio could improve to 18.9% from 16.1% currently.
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