RBL Bank shares rise 9% as Emirates NBD Bank to acquire 60% stake in lender; CLSA calls it 'landmark deal'

On October 13, Moneycontrol was the first to report that Emirates NBD had entered advanced talks to acquire a majority stake in RBL Bank in a mega proposed transaction which would trigger an open offer. The report mentioned that the preferential route was likely to be used for the deal which would be subject to RBI approval.

Later on October 15, Moneycontrol also reported that RBL Bank was set to become the largest subsidiary of Emirates NBD outside Dubai and was nearing a $3-billion deal.

The proposed investment will be made via a preferential issue of up to 60 percent, and will be subject to regulatory approvals and other customary closing conditions. As part of this transaction, ENBD will also make a mandatory open offer for the purchase of up to 26 percent stake from the public shareholders of RBL Bank, in accordance with SEBI's Takeover Regulations.

The Board of Directors of ENBD and RBL Bank also approved the amalgamation of the India branches of ENBD with and into RBL Bank as required by RBI guidelines. This amalgamation is expected to be completed after the execution of the preferential issuance into RBL Bank.

Here's what analysts say:

Analysts at CLSA called it a "landmark deal" for a financial services company in India, noting that benefits from the investment will be seen in the long term. The stake buy, which will also trigger an open offer for additional RBL shares, is the beginning of a new chapter for the Indian private lender, Citi analysts said.

The substantial influx of "confidence capital" significantly enhances medium-to-long term growth visibility for RBL Bank, they said.

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(With inputs from Reuters)

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