Business Standard

Axis Bank to raise ~11,600 cr from Bain Capital, LIC

- DEVIDUTTA TRIPATHY

Mumbai-based lender Axis Bank is set to raise ~11,626 crore ($1.8 billion) to further strengthen its capital base by selling shares and warrants to a group of investors, including Bain Capital and top Indian insurer Life Insurance Corp (LIC).

The private lender in a filing said its board had approved the sale of up to 172.63 million shares at ~525 each, and 45.36 million convertibl­e warrants at ~565 each on a preferenti­al basis.

Ahead of the news, Axis Bank’s shares on Friday had closed 0.8 per cent higher at ~544.50 on the BSE, compared with a 0.1 per cent gain in the broader market. The stock is up 21 per cent so far in 2017, underperfo­rming a 40 per cent rise in the banking sector index and a 26 per cent gain in the main market index. The fundraisin­g “will bolster the capital adequacy of the bank, thereby providing growth capital for the core business ... and its subsidiari­es”, the bank stated on Friday, after securing its board’s approval for the deal.

The capital-raising comes after the lender, India’s thirdbigge­st among the private sector ones and seventhbig­gest overall by assets, saw its bad loans surge in the second quarter to September 30 after the Reserve Bank of India’s audit.

While the 21 state-run lenders account for bulk of India’s record $146 billion soured loans, some of the private sector lenders have also seen defaults rising in the recent quarters.

Despite the rise in bad loans, Axis Bank’s capital adequacy ratio stood at 16.32 per cent of assets at the end of September.

The bank will raise ~9,063 crore from the share sale and ~2,563 crore from the sale of warrants.

Affiliates of Bain Capital will invest ~6,854 crore in the bank, while LIC, which is owned by the Indian government and already owns a stake in Axis Bank, will invest ~1,583 crore.

The bank will put the fund-raising plan to a shareholde­rs’ vote on December 8, it said.

Axis Bank’s investment banking arm Axis Capital advised it on the deal, while JP Morgan advised Bain Capital.

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