IDFC First Bank To Raise Rs.3200 Cr through Preferential Issue

IDFC FIRST Bank is an Indian private sector bank formed by the merger of the banking arm of Infrastructure Development Finance Company and Capital First, an Indian non-bank financial institution. The private bank has a market capitalization of more than Rs.50,000 crores. IDFC First Bank board has approved the plan to raise Rs.3200 crores of equity shares on a preferential basis.

IDFC First Bank To Raise RS.3,200 Cr

IDFC First Bank board has approved the plan to raise Rs.3200 crores of equity shares on a preferential basis. Under this scheme, The bank is set to distribute about 39.68 crore shares to prominent institutional investors in India, such as LIC, HDFC Life, ABSL Insurance, Bajaj Allianz Life, ICICI Lombard, and SBI General Insurance. This initiative aims to raise fresh equity capital at Rs 80.63 per share, marking a premium of 4.51% compared to the closing price on the day prior to the Board meeting. This strategic move underscores the bank’s commitment to strengthening its financial position and expanding its investor base within the Indian market.

Post Allotment Capital Structure

Following the allotment, the bank’s issued and paid-up equity share capital will surge from 707,727,684 equity shares valued at Rs.10 each to 747,415,144 equity shares also valued at Rs.10 each, all fully paid-up. The bank has emphasized that this issuance is contingent upon obtaining shareholder approval. Additionally, the board has sanctioned the initiation of a postal ballot to obtain shareholder consent for the issuance and allotment of equity shares on a preferential basis to the designated recipients.

Objectives of the Issue

IDFC First Bank has said “After our last capital raise of ₹3,000 crore, the RBI had raised the risk weights on consumer credit exposures in November 2023, which consumed around 1% of the bank’s capital. Hence, this capital is being raised prudently for future growth of the bank while factoring the new risk weights,”

Conclusion: The bank is set to allocate approximately 39.68 crore shares to major institutional investors, raising fresh equity capital at Rs 80.63 per share. This strategic move, subject to shareholder approval, signifies the bank’s commitment to building its financial position and expanding its investor base, ensuring a strong foundation for future growth endeavors. The shares of IDFC First Bank are currently trading at Rs.77.5 a piece.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.