Dhanlaxmi Bank calls off fund raising plan, stock down

Dhanlaxmi Bank has called off a plan to raise Rs 290 crore (USD 65 million) via preferential allotment to a clutch of investors after one of the proposed investors backed off due to regulatory issues, its chief financial officer said.

Shares in the firm, which is valued by the market at USD 230 million, fell as much as 3.75% after the news.

Customers Bancorp Inc, a proposed investor which planned to subscribe 4.9% in Dhanlaxmi, backed off from the share sale due to 'certain regulatory reasons' at its end, the lender said in an exchange filing on Friday.

"We are not talking to other investors. We do not want to offer at market price, we will wait for a premium when the market is conducive," Bipin Kabra told Reuters over the telephone.

Earlier in May, the private lender had said it plans to raise upto Rs 290 crore to support its growing business needs, expansion plans and strengthen capital adequacy ratio.

Investors including MKCP Mauritius Master Holdings II Ltd, Multiples Private Equity FII, Multiples Private Equity Fund and WCP Mauritius Holdings were planning to buy 19.6% stake in the lender.

Kerala-based Dhanlaxmi Bank, which has about 145 branches in the southern Indian state, is eyeing forays into new segments such as gold finance to boost profitability.

"We were never desperate for the funds. We will examine the options and since I have all the approvals in place my turnaround time is very less," Kabra said.

Kabra had said in June the bank was looking to raise another Rs 700 crore in 6-9 months, after the Rs 290 crore issue.

At 0457 GMT, shares in the firm were trading down 3.04% at Rs 116.50 in a Mumbai market that was down 0.16%.