Private lender Axis Bank on Tuesday said it has raised Rs 10,000 crore through allotment of equity shares to qualified institutional buyers (QIB). Post the announcement, bank’s scrip traded over 3 per cent on the indices.
At S&P BSE lender’s shares traded at Rs 444.95, up by Rs 14.00 or 3.25 per cent. Similarly on the NSE share price of Axis Bank rose 3.24 per cent or Rs 13.95 at Rs 445.40.
“The Committee of Whole-Time Directors of the Bank (the ‘Committee’), at its meeting held today (Monday), has considered and approved the allotment of 238,038,560 equity shares at a price of Rs. 420.10 per Equity Share,” the bank said in a regulatory filing.
The issue price is at a discount of 5% (i.e. Rs. 22.09 per equity share) to the floor price of Rs. 442.19 per Equity Share, aggregating to Rs. 100,000 million, it added.
The bank’s chief executive and managing director Amitabh Chaudhry said the issue was subscribed over 3.5 times and received over 70 bids from a diverse set of global and domestic investors.
Investors who participated in the round of capital raise include ICICI Prudential Mutual Fund, Aditya Birla Sun Life Mutual Fund, Fidelity Investments, T Rowe Price, Bajaj Life Insurance and also Max Life Insurance, PTI quoted a source as saying.
The paid up equity share capital of the bank has now gone up to Rs 612 crore (over 3 crore shares of the face value of Rs 2 each) as compared to Rs 564 crore earlier.
Speaking to a TV channel, Chaudhry said the common equity tier-I buffer now goes up to 15.13 per cent and the total capital adequacy has moved up by nearly two percentage points to 19.1 per cent.
He said the bank already had the required capital to make provisions for the likely reverses amid the COVID-19 pandemic and added that the new fund-raise places it at a comfortable level.
Chaudhry termed the transaction as a confidence capital which signals that the bank can grow its balance sheet and support the economy, and allays all the possible concerns.
He said the bank expects more stress in the retail segment rather than the large corporate segment for the upcoming restructuring package and pointed to its experience with the two moratorium packages of the RBI, where the small borrowers dominate those seeking relief.
Amid the COVID-19 pandemic, a slew of lenders has been bolstering their capital because of the likely impact on their balance-sheets because of the crisis. Excess liquidity is helping them raise money quickly.
Last week, Axis Bank had set a floor price of Rs 442.19 per equity share for its proposed Rs 15,000-crore qualified institutional placement (QIP).
The board of the bank had last month approved the Rs 15,000 crore fund raise plan. The QIP was okayed by shareholders at the annual general meeting held on July 31, 2020, the bank said.
Apart from Axis Bank, other lenders which have also raised capital or are in the process of raising include Kotak Mahindra Bank, ICICI Bank, Federal Bank and SBI.