Moneycontrol BureauKolhapur-headquartered RBL Bank, the first private sector lender to hit capital market in a decade, will open its three-day public issue for subscription on August 19. It targets to raise more than Rs 1,200 crore through this issue at a price band of Rs 224-225 per share.The issue, which will close on August 23, comprises of fresh issue and offer for sale. Bids can be made for a minimum of 65 equity shares and in multiples of 65 shares thereafter. The subscription for anchor investors’ portion will be opened for a day on August 18, the day before issue opening.Here are 10 things you should know before subscribing the issue:FRESH ISSUE & OFFER FOR SALEThe issue comprised of fresh issue of equity shares by the bank aggregating up to Rs 832.5 crore; and an offer for sale up to 1,69,09,628 equity shares, including 38,79,070 shares by 48 shareholders like Elephant India Finance, Capvent India Private Equity Fund, Gaja Trustee Company (on behalf of Gaja Capital India Fund I) etc.
Other shareholders in offer for sale are Beacon India PE Fund (95,05,558 shares) and GPE India (35,25,000 equity shares).
OBJECTS OF THE ISSUEThe bank will not receive any proceeds from the offer for sale.
The objects of the fresh issue are to augment bank’s Tier-I capital base to meet future capital requirements which are expected to arise out of growth in assets, primarily loans/advances and investment portfolio, and to ensure compliance with Basel III and other RBI guidelines.
In addition, the bank believes that the listing of equity shares will enhance visibility and brand name among existing and potential customers.
PRE-IPO PLACEMENT and SHAREHOLDINGThe Kolhapur-based lender has made a pre-IPO placement of 2.5 crore equity shares to few investors and raised Rs 487.5 crore at a price of Rs 195 per share in last quarter of 2015. Investors included CDC Group, DVI Fund Mauritius, Rimco (Mauritius) and Asian Development Bank.
As of July 29, the bank has 12,575 shareholders and out which 24 shareholders held more than 61 percent stake in the bank.Top 10 shareholders as of July 29, 2016
The bank said the average cost of acquisition of equity shares by Beacon, GPE, Elephant India Finance, Capvent India PE Fund and Gaja Trustee Company (on behalf of Gaja Capital India Fund I) was Rs 66.68, Rs 73.71, Rs 66.10, Rs 66.00 and Rs 69.38 per share, respectively.
CDC Group PLC, in March 2014, subscribed to 1,35,43,175 equity shares at a subscription price of Rs 128.10 per share.
As of FY16, 49.995 percent of paid-up share capital was held by non-residents. This percentage decreased to 49.34 percent as of June 30, 2016.
The approval to IPO, in January 2015, by the Foreign Investment Promotion Board increased the aggregate foreign investment in the bank from the approved 55 percent to 74 percent subject to condition that the amount of FDI inflow shall not exceed Rs 1,150 crore, the company said.
Before the public issue, the bank raised funds through rights issue in 2011, preferential issue in 2013 & 2014 and pre-IPO placement in 2015. With this share capital increased from Rs 2,529 crore in FY13 to Rs 3,247 crore in FY16.
NETWORK and EXPANSIONThe company changed its name to RBL Bank from Ratnakar Bank in 2014 as part of a brand-building exercise that saw it spread its network from western Maharashtra and northern Karnataka, to other parts of the country.
As of FY16, it has 197 interconnected branches (88 branches in Tier 1 centers and 109 branches in Tier 2 to Tier 6 centers) and 362 interconnected ATMs spread across 16 Indian states and union territories serving approximately 1.90 million customers. As part of growth strategy, the bank acquired certain Indian businesses of the Royal Bank of Scotland (RBS), including RBS’s business banking, credit card and mortgage portfolio businesses, in FY14.
It also recently acquired a minority stake in Swadhaar FinServe Private Limited, a company acting as a business correspondent, facilitator, agent and distributor for financial services providers for Rs 20.5 crore.
EARNINGSProfit in the year ended March 2016 increased 41.2 percent, net interest income 47.2 percent, operating profit 50.6 percent and other income 21.6 percent compared to FY15.
Net interest margin remained stable at 3 percent in FY16 and FY15 each against 2.7 percent in FY14 and 3.2 percent in FY13.
ASSET QUALITYAsset quality deteriorated in the year ended March 2016 as net non-performing assets (NPA) more than doubled to 0.59 percent compared to FY15. Asset quality concerns were also seen across the banking sector especially in the second half of FY16.
The bank had provided for an amount of Rs 93.19 crore during the fiscal year ended March 2016 towards provision for NPA, non-performing investments, depreciation on investments, write-off and sacrifice for restructured advances.
Provisioning coverage ratio declined to 55.87 percent in FY16 from 68.28 percent in FY15.
LOAN EXPOSUREThe bank’s exposure to real estate sector stood at Rs 2,248 crore at the end of March 2016, representing 7.08 percent of gross credit portfolio.
Its exposure to the industries exceeding 5 percent of the total gross credit exposure (as per Basel III disclosure) are infrastructure, traders, food processing, construction, NBFC (MFI) and chemical products. Furthermore, it has substantial exposure to agriculture and MSMEs, the priority sectors.Gross priority sector advances aggregated Rs 6,862.22 crore, the RBL said.
Its aggregate loans advanced to 20 single largest borrowers amounted to Rs 4,635.29 crore, representing 14 percent of total advances as of March 2016.
ADVANCESAs of March 2016, 82.67 percent of net advances were secured by collateral, including real estate assets, property, gold ornaments, plant, equipment, inventory, receivables, current assets and pledges or charges on fixed assets, bank deposits, NSC/KVP/insurance policy or financial assets such as marketable securities and guarantees.
A 17.33 percent (or Rs 3,678.87 crore) of net advances were unsecured.
DEPOSITSIts total deposits at the end of FY16 stood at Rs 24,348.7 crore against Rs 17,099.3 crore in FY15.
As on FY16, top 20 depositors constituted 22.88 percent of total deposits as compared to 27.32 percent and 23.82 percent as of FY15 and FY14.
DIVIDEND & COMPETITORS
The bank paid dividend of 9 percent (90 paise) and 12 percent (Rs 1.2) per equity share to shareholders for FY14 and FY15, respectively. It has also paid an interim dividend of 15 percent (Rs 1.5) per share for FY16.RBL said it did not expect to pay any final divided over and above the interim dividend already paid.
Comparison with listed industry peers (FY16)
Equity shares are proposed to be listed on the Bombay Stock Exchange and National Stock Exchange.The bank, which had filed draft papers with SEBI in June last year for approval to float IPO, received clearance from the regulator on July 27. The market regulator had withheld approval of RBL’s IPO being examined for few violations. The approval was after SEBI settled an outstanding case against the lender for alleged violation of disclosure norms with regard to an earlier issuance of shares to select investors for over Rs 600 crore.
Kotak Mahindra Capital, Axis Capital, Citigroup Global Markets India and Morgan Stanley India are global co-ordinators as well as book running lead managers for the issue. Other book running lead managers are HDFC Bank, ICICI Securities, IDFC Securities, IIFL Holdings and SBI Capital Markets.
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