(Disclosure:I am market making in Ratnakar Bank)
Kolhapur-headquartered Ratnakar Bank has drawn up plans to raise about ₹1,000 crore through an initial public offer in the current financial year.
According to Vishwavir Ahuja, MD and CEO, his bank has reached a tipping point, in terms of balance sheet size, profitability and number of branches, with all three parameters seeing robust growth in the last four years.
₹18,000-cr balance sheet
Ahuja said Ratnakar Bank is likely to end FY14 with a balance sheet size of ₹18,000 crore against ₹2,300 crore in July 2010, when the new management took charge.
Further, its profit is expected to be close to the three-digits mark in FY14 against ₹19 crore in 2010-11.
In FY13, the bank reported a net profit of ₹92 crore (₹66 crore in the year-ago period) on a balance sheet size of ₹13,000 crore (₹7,200 crore).
From about 50 branches, predominantly concentrated in Maharashtra and Karnataka, in 2010, the 71-year-old bank, which has been re-branded as RBL Bank, now has 175 branches spread across 12 States.
Pointing out that it has achieved all transformation goals, in terms of balance sheet size, profitability, geographical expansion, technology infrastructure, governance and capital, the new management set out to achieve four years ago, Ahuja said the bank has reached a tipping point whereby the next round of capital raising via an IPO will set the stage for the next three years of growth.
Ahuja said, “We might do it (IPO) in this calendar year or latest in the fourth quarter of this financial year.”
Receives ₹167-cr investment
On Wednesday, the bank received investment amounting to $28 million (₹167 crore) from UK-based CDC Group. In the process, CDC picked up 4.8 per cent stake in the bank.
“The capital will be enough for this year,” said Ahuja.
In the last three years, the bank received investments aggregating ₹1,470 crore in three tranches. Shareholders who invested in the bank include HDFC, Norwest Venture Partners, Cartica Capital, International Finance Corporation, Faering Capital and Gaja Capital Partners.
Ahuja said the bank has managed to raise capital as and when the capital adequacy ratio (CAR) has fallen below 14 per cent. Post the CDC investment, the bank’s CAR has returned to 16-17 per cent.-from BusinessLine
Category: Excerpts
Categories
What trading is all about
Hat Tip Steve Burns
(Disclosure:I am market making in RBL Bank)
UK-based CDC Group has invested $28 million (Rs 167.3 crore) in private sector lender Ratnakar Bank, a transaction that will see the British development finance institution pick up a 4.8% stake in the Kohlapur-based, private equity-backed bank.
The proceeds will be used by Ratnakar Bank to expand its operations in newer geographies. The investment is also the first direct equity transaction in a bank entered into by CDC under its new investment strategy that was unveiled last year.
“We greatly value the confidence CDC has reposed in our strategy and our commitment to building a sustainable bank that has as one of its key objectives to providing financial services to the larger under-banked and unbanked parts of India,” said Rajeev Ahuja, head of strategy at Ratnakar Bank.
Ratnakar Bank, which has been undergoing a transformation to be a pan-India player, has been pursuing an expansion-focused strategy, based on financial inclusion, agribusiness financing and lending to small and medium-sized enterprises. It has a total business size of over $3.5 billion (Rs 20,917.8 crore) and offers its services to over 5 lakh customers, according to a press statement released by the company.
” We view this is as a unique opportunity to invest in an institution which has a real prospect of becoming a platform serving a population that CDC wants to reach and fostering financial inclusion, financing of SMEs and agribusiness,” said Srini Nagarajan, regional director – South Asia, CDC.
The private sector lender will now look to expand its services into a number of India’s poorer states, including, Rajasthan, Madhya Pradesh and West Bengal, where the penetration of financial services has, historically, been amongst the lowest in the country.
“CDC is strongly aligned with RBL Bank’s strategy to expand and provide a range of financial services to customer segments that are under-served by the market, and our stable investment approach will complement the company’s strong management team as they continue to implement the bank’s growth strategy,” CDC’s Nagarajan said.
The Indian banking sector is growing at a rate of 14% to 16% per year. However, according to reports published by the World Bank, more than two-third of the country’s population are yet have access to formal financial services, a massive hurdle that severely limits their ability to plan, save or borrow to improve their economic prospects.
“The potential impact of RBL Bank’s growth is significant. The bank’s branch network is set to double in five years, creating thousands of jobs, and we also anticipate significant job creation in semi-urban and rural areas through the agri-value chain financing and SME lending activities,” said Holger Rothenbusch, managing director – debt and financial instruments, CDC.-from ET
Categories
Indians Prefer Schadenfreude to Success
“We have developed what everyone acknowledges as “a crab mentality”.Since we are forced to play courtiers rather than kings, we spend all our time in palace intrigues, pulling people down and conspiring against one another. Our own success matters less to us than someone else’s misfortune. We prefer schadenfreude to success.”-wrote Jaggi
Categories
How India Inc allocates capital
We found that over the past 10 years, large Indian corporates have allocated far more of their operating cash flow to acquisitions and capex than their peers in other large economies. In fact, over the past decade, BSE100 companies have actually spent more cash on acquisitions and capex than they have generated.
As a result, large Indian corporates have returned less cash to their shareholders than their peers in other large economies. This ultra-aggressive spending and reluctance to return cash to shareholders is extraordinary in a country where the cost of capital is the highest outside sub-Saharan Africa.-from ET