Preferential allotment by RBL Bank

(Disclosure:I am market making in the shares of RBL Bank)

Ahead of its IPO,RBL Bank plans a preferential allotment to select investors like Asian Development Bank,CDC etc at 190-200 Rs/share

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RBL Bank files for IPO

(Disclosure:I am market making in the shares of RBL Bank)

Private sector lender RBL Bank (formerly Ratnakar Bank) on Tuesday filed its draft red herring prospectus (DRHP) with market regulator Securities and Exchange Board of India (Sebi) to raise Rs 1,100 crore by issue of fresh shares through an initial public offering (IPO).

Apart from the fresh equity, two existing shareholders of the bank — Beacon India Private Equity Fund and Gpe (India) will also divest 9.5 million and 3.5 million equity shares, respectively in the IPO.

The bank is also looking at private placement of up to 25 million equity shares for cash consideration aggregating up to Rs 500 crore. In case the pre-IPO placement is completed, the size of the IPO will come down accordingly.

The RBL Bank issue is being managed by Kotak Mahindra Capital, Axis Capital, Citigroup, Morgan Stanley, HDFC Bank, ICICI Securities, IDFC Securities, IIFL Holdings and SBI Capital Markets.

-from BS


RBL Bank set to file for IPO within a week

Hat Tip: Shivam Bose

(Disclosure:I am market making in the shares of RBL Bank)

RBL Bank Ltd, a privately held lender backed by a clutch of private equity funds, is set to file its draft red herring prospectus (DRHP) with the markets regulator within a week, said three people familiar with the development.

“The bank is looking to raise Rs.1,450 through its initial public offering (IPO), of which Rs.1,100 crore will be raised to increase the capital adequacy ratio of the bank and the rest to give exit to a few private equity funds,” said the first investment banker mentioned above.

The bank has hired around nine investment banks to run the process. The IPO would help the bank comply with the Reserve Bank of India (RBI) guidelines issued last year that directed all banks to list within three years of starting business.

Over the last three years, global and local private equity and development funds have invested over Rs.1,400 crore in the bank in three tranches. Housing Development Finance Corp. Ltd (HDFC), Norwest Venture Partners, Samara Capital, Beacon Capital, Faering Capital, TVS Shriram, Cartica Capital, Ascent Capital, Aditya Birla Private Equity, IDFC’s Spice Fund and ICICI’s Emerging India Fund are among its shareholders.

The share sale will make RBL the 41st publicly traded bank in India.-from Mint

RBL Bank:In the fast lane

(Disclosure:I am market making in the shares of RBL Bank)

RBL Bank, a mid-sized lender, is a potential takeover target for some larger banks. Not surprising, considering that the bank has been turned around in the last four years by its Managing Director and CEO, Vishwavir Ahuja. “Many,” says Ahuja, when asked whether any bank had approached RBL for a friendly merger.

Indeed, several old private-sector banks have been acquired in recent years. Unlike RBL (formerly Ratnakar Bank), the survival of most of them was at stake because of poor operating performance. Ahuja is confident of the future prospects of his bank. “There is no question of any merger,” he says. Clearly, the bank, under a new management since June 2010, which includes foreign bankers, is aiming big.

In the BT-KPMG study, RBL has emerged as a “Growth Winner” among mid-sized banks. It has a balance sheet size of Rs 18,198 crore and grew its deposits by 39 per cent and advances by 54 per cent in 2013/14. The three-year compound annual growth rate (CAGR) in deposits as well as advances is over 70 per cent. The fee income jumped 110 per cent in 2013/14. The number of branches has jumped from 80 in 2010 to close to 200 now. “We are very much in the interim phase in our long journey,” says Ahuja.

RBL, under Ahuja, actually went and bought the credit card business of Royal Bank of Scotland in August 2013. In the last four years, Ahuja has revamped the top management, raised capital from marquee names, rebranded its identity as RBL, and launched Internet banking, among other business initiatives.

RBL focused on small and medium enterprises when Ahuja took over. The total size of the loan book was just Rs 900 crore and the bank also had a negative return on equity (ROE) in 2010. Today, all its businesses have been expanding at a scorching pace, expanding anywhere between four and 10 times in the past four years. Its loan book is now about Rs 9,835 crore and it has an ROCE of 5.12 per cent.

“We want to be a mass-banking institution rather than an urban-centric bank,” says Ahuja. The bank already has a presence in 13 states and will expand to 17 states next year and 20 states in 2016.

The next trigger for the bank’s growth will come from its IPO, according to Ahuja. “We will raise a significant chunk of capital in the near future,” he says. But there are challenges ahead. The big private banks, including HDFC Bank and ICICI Bank, are expanding into rural and semi-urban India, a thrust area for RBL. The Reserve Bank of India’s new differentiated licensing mechanism will create new payment and small banks focused on rural and semi-urban centres. But Ahuja remains unfazed. “The competitive landscape will definitely change in the future, but there is enough space for everyone,” he says-from Business World


RBL Bank:Fast Growth was part of the plan

(Disclosure:I am market making in the shares of Ratnakar Bank)
Ahuja and his team have hoisted the sails of RBL to favourable winds. Its net advances and demand deposits soared over 50 per cent to Rs 9,835 crore and Rs 2,341 crore, respectively, in the past four years. In terms of size, it logged assets worth Rs 18,198 crore last fiscal and added 51 branches, widening its overall reach to 185 branches and 350 ATMs, with more than five lakh clients.  
While intending to grow at a fast pace, RBL has managed to trim instances of credit defaults and a resultant NPA pile-up. Its gross and net NPAs stood at 0.79 per cent and 0.31 per cent, respectively — among the lowest in the industry. RBL has grown in the range of 40-50 per cent across key business parameters, making it the ‘Fastest Growing Small Bank’ in the BW | Businessworld-PwC Best Banks Survey 2014. 
“Fast growth was part of the plan,” says Ahuja. “We were a small bank, with a balance sheet size of less than Rs 2,500 crore in 2010. Now, we are above Rs 20,000 crore and growing. We’re operating on a small base, but it’s more difficult to grow a small bank in a market with so many sophisticated players. It becomes even more difficult when there are legacy issues to sort out.” 
The bank is focusing on expanding its customer base and not particularly the balance sheet. Mid- and low-market rural customers are still its focus. The bank has reached out to smaller markets in Gujarat, Karnataka, Maharashtra and Madhya Pradesh. It disburses about one-third of its loans to farmers, small businesses and low-income consumers.
“Our model is more credit-led than deposit-led,” says Ahuja. “Our development banking/ financial inclusion vertical is initially credit-led. Once you have sufficient penetration and basic savings accounts, the pipeline is in place. That is when we lay out our other products — starting from a basic account to small remittances, then some balances and some other products.” 
RBL plans to hit the equities market with a public offering, which market sources say may be worth Rs 1,250 crore. Besides raising capital, the public issue would provide an exit route to many of RBL’s private equity investors. “The top five-eight investors will stay with us even after the IPO,” predicts Ahuja.from BusinessWorld