IndusInd Bank taps CPPIB, GIC to raise $500 million

MUMBAI: IndusInd Bank and its promoter the Hinduja Group have initiated talks with sovereign wealth funds and pension funds, including Canada’s CPPIB and Singapore’s GIC Pte Ltd, to raise as much as $500 million. This is aimed at bolstering investor confidence amid deterioration of the private lender’s balance sheet and flight of deposits after the Yes Bank Ltd fiasco.

More than two-thirds of the bank’s market value has been wiped off since the beginning of March. The stock last traded at ₹313.25 on Friday.

“IndusInd Bank has been one of the most impacted banks in the covid-19 market rout. With promoter shareholding almost close to the maximum cap defined by the Reserve Bank of India, they have to bring in external investors to pump in capital. The group is in talks with deep pocketed investors who can help bring in capital and also assuage market concerns,” said one of the people cited above, requesting anonymity as the talks are private.

Promoter stake at IndusInd Bank stands at 14.68% as against the maximum regulatory limit of 15%. Promoters have shown interest in bringing additional capital into the bank, but any such effort will require the approval of the central bank.

Some of the investors that have held talks with the bank include Canada’s largest pension fund manager Canada Pension Plan Investment Board (CPPIB) and Singapore’s state investor GIC, the person said, adding that the talks are in early stages.

Investment bank Morgan Stanley has been hired to help with the fundraising efforts, the person said. IndusInd Bank and CPPIB declined to comment. Emails sent to GIC, Morgan Stanley and the Hinduja Group did not elicit a response.

“The bank is well-capitalised with Tier 1 ratio of 15% and Capital Adequacy Ratio of 15.43% (with 9M FY20 profit),” the bank had informed stock exchanges on Friday.