Category: Excerpts

Private lender RBL Bank has raised Rs 488 crore via pre-IPO preferential placement to international investors Asian Development Bank, CDC Group Plc, family offices and long-only funds such as DVI Fund (Mauritius) Ltd and Rimco (Mauritius) Ltd.

The latest round of fundraising values the Kolhapur-headquartered bank, formerly known as the Ratnakar Bank Limited, at nearly Rs 6,500 crore. ADB has picked up 4.45% stake, making its maiden equity investment in RBL, while UK-based CDC Group, which had invested in the bank in 2014, will see its stake go up to 4.91% after the latest private placement.

The bank’s net total income in 2014-15 grew 59% toRs 960 crore from Rs 603 crore a year ago, while its net profit surged 124% to Rs 207 crore. Both advances and deposits grew 47% over that in the previous year, to Rs 14,450 crore and Rs 17,099 crore, respectively. At the end of the financial year, the bank’s gross and net non-performing assets stood at 0.77% and 0.27%, respectively. –from ET

The Securities and Exchange Board of India (Sebi)’s recent decision to not penalise unlisted entities in breach of the public issue norms is a shot in the arm for the latter’s initial public offering (IPO) plans.

At least six companies, according to a source, were not able to proceed with their IPO plans, having breached the investor cap prescribed in the erstwhile Companies Act.Sebi at its board meeting on November 30 clarified that such companies will avoid penal action if they provide investors an option to surrender their securities.

Sources said the IPO plans of diagnostics chain Thyrocare Technologies and private sector RBL Bank (former Ratnakar Bank) didn’t get the market regulator’s nod for this reason. Legal experts said Sebi’s latest clarification will help these two companies and five-odd others which have not been able to file their IPO documents.

“Sebi has come out with a pragmatic and good solution of not imposing any penalty if there is a refund of money to shareholders,” said Sudhir Bassi, executive director, Khaitan and Co, a leading law firm. “At least four-five companies which couldn’t file for IPOs due to this reason. Some of them will now come out with their IPOs.”-from BS

The Securities and Exchange Board of India (Sebi) has issued a show-cause notice to RBL Bank over possible rule violations, which could hinder the 72-year-old lender’s plans to raise an estimated Rs 1,450 crore though an initial public offering (IPO).

The bank can go ahead with the IPO only “after the show-cause notice is discharged,” said a person familiar with the matter. A show-cause notice is not an indictment;it asks the recipient to explain why legal action shouldn’t be taken.

“Past violations are being examined,” the regulator said on its website while updating the status of the public issue. RBL, formerly Ratnakar Bank Ltd, filed its draft offer document with Sebi on June 23, looking to raise money to fund expansion and modernization as it seeks to outgrow its origins as a small, community bank based in Kolhapur in Maharashtra.
The notice stems from share allotments under earlier management on three occasions to more than 49 investors, in possible breach of Sebi rules and the Companies Act on public offerings, which ET reported in July.

In 2003, it made a rights issue of 9.54 lakh equity shares at Rs 100 a piece. This was subscribed to the extent of 4.71 lakh shares. The unsubscribed 4.83 lakh shares were allotted to 2,591 investors, most of them from Kolhapur and customers.
In 2006, came another rights issue of 19.38 lakh shares at Rs 100 a piece, which was subscribed to the extent of 8.17 lakh shares. The unsubscribed 11.21 lakh shares were allotted to 1,969 investors.

Subsequently, stemming from the rights issue, the bank made a preferential allotment of 2.52 lakh equity shares at Rs 100 apiece to 352 persons.

According to section 67(3) of the Companies Act, 1956, which was applicable at the time of the allotments, any offer or invitation for subscription of shares made to more than 49 persons is deemed a public offering.

To make a public offering of securities, companies are required to comply with certain requirements under Sebi rules and the Companies Act, such as issue and registration of a prospectus with required disclosures.
It also needs to make an application for listing of the securities on the stock exchanges.

“If a company has been in serious violations of rights issue and preferential allotment rules in the past, it is going to be very difficult for the regulator to give a go-ahead with an IPO to such companies,” said Vaneesa Abhishek, Bombay High Court advocate. –from ET