Emirates NBD-RBL Bank Deal: Local Shareholders Vote, Regulatory Nods In First Phase
Depending on shareholder interest in the open offer, RBL Bank will adjust the preferential allotment in a way that the eventual shareholding of Emirates NBD will be 60%.
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Shareholders of RBL Bank will first vote on the deal with Emirates NBD next month at the bank's annual general meeting.
According to R Subramaniakumar, MD & CEO of RBL Bank, once the shareholder nod is in place, both the domestic bank and the Dubai-based buyer will make an application with relevant regulators for approvals.
After the regulatory approvals, Emirates NBD will make an open offer for RBL Bank’s shareholders at Rs 280 a share. This is being conducted under a SEBI rule, which allows open offers to come before a preferential allotment in an equity fund raise.
Depending on shareholder interest in the open offer, RBL Bank will adjust the preferential allotment in a way that the eventual shareholding of Emirates NBD will be 60%.
According to Jaideep Iyer, head of strategy at RBL Bank, the bank will also give 8.5 crore more shares to Emirates NBD after the foreign lender’s India branches will merge with it.
The first tranche of the fund infusion should hit the bank in five-eight months, according to Subramaniakumar.
With the fund infusion, RBL Bank's return on assets will expand quite a bit due to the large free float funds in place. Capital adequacy ratio too will increase to 40%, according to Iyer.
The funds will be used to rapidly expand RBL Bank’s business. Subramaniakumar expects RBL Bank to enter the big leagues in the Indian banking landscape, going from a mid-sized bank to a large lender.
