Shares of private lender RBL Bank rose over 4% on October 15 to reclaim February 2020 level as Moneycontrol reported that it is set to become Emirates NBD's largest subsidiary outside Dubai.
Earlier, on October 15, Moneycontrol reported, citing sources, that Dubai-headquartered Emirates NDB is close to concluding a near $3 billion deal with RBL Bank.
Sources privy to the development said that in the first phase, Emirates NDB, through its Indian unit, will make an offer to acquire a strategic 51% stake in RBI Bank. This capital is expected to be brought in as fresh equity priced at about Rs 295 a share, amounting to an infusion of over Rs 18,000 crore or $2.2 billion.
Emirates will take five critical board positions in RBL after acquiring majority stake, making RBL Bank it's largest subsidiary outside its home turf, Dubai.
On October 13, Moneycontrol reported that Emirates NBD in advanced talks for acquiring majority stake in RBL Bank.
At 12:20 pm on October 15, RBL Bank shares were trading 3.5% higher at Rs 301.35 apiece.
Upon conclusion of primary capital infusion, Emirates is expected to make an open offer to mop up an additional equity stake in the bank. The open offer, according to sources, could amount to Rs 9,000 crore, representing a stake of around 23–24%. “Emirates is well-prepared to roll out a voluntary open offer for 10% soon as the deal is announced. However it plans to mop up more stake through open offer,” said a banker who didn’t want to be named. With this, Emirates would have infused roughly $3 billion into RBL Bank.
The deal is likely to be executed through Emirates NBD Bank PJSC, which has received an in-principal approval from the Reserve Bank of India to convert into a wholly-owned subsidiary (WOS) of Emirates NBD in India. It was earlier operating as a branch of Emirates in the country.
The deal, if it consummates on these lines, will be largest investment by a foreign bank in India's private banking landscape. This would also be the second instance of a global bank showing interest in India so far in 2025, the first being Sumitomo Mitsui Banking Corporation's (SMBC) investment in Yes Bank.
Emirates NBD, alongside others like Canada's Fairfax Financial Holdings, was also contending for a 60% stake in government-owned IDBI Bank until recently. It is unclear if it will continue to explore that deal if it pursues a stake in RBL.
Analysts at ICICI Direct Research said the entry of a globally well-capitalised promoter like Emirates NBD could improve governance and boost investor confidence, potentially reshaping market sentiment for mid-sized banks in India, reported Reuters.
RBL Bank's shares have gained 85% this year, bucking the benchmark Nifty 50 index's 8% decline as investors favoured the bank's strong growth and potential for investment by a foreign player.
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