Mumbai: The capital markets regulator has given the conditional approval for the initial public offer of RBL Bank Ltd (formerly Ratnakar Bank), and a final go-ahead is expected soon, three people aware of the development said.
“The bank has been in constant dialogue with the regulator and was asked to meet certain conditions. We expect to be compliant with the regulations very soon and accordingly get the final approval,” said one of the people cited above on condition of anonymity. The bank expects to get the final approval so as to launch the public offer by September, the person added.
RBL, which had filed its draft prospectus with the regulator Securities and Exchange Board of India (Sebi) on 23 June 2015, has been waiting for the Sebi’s approval for almost 10 months now.
The regulator had withheld approval as RBL had in the past issued securities to more subscribers than stipulated under The Companies Act, 2013.
In its draft prospectus, RBL Bank disclosed that in 2003 and 2006, it issued shares to more than 200 subscribers. The previous board had allotted shares via rights issues to 2,591 investors on 19 February 2003.
It further allotted shares to 1,969 investors through another rights issue on 21 February 2006, according to risk factors highlighted by the company in its draft prospectus. These share issues do not comply with the new rules.
In December, Sebi announced that any offer or allotment of securities shall be considered as public issue if the number of allottees exceeds 200 persons in a fiscal year under the Companies Act, 2013, as against the cap of 49 persons provided in The Companies Act, 1956.
As per the 2013 act, if there are more than 49 investors and up to 200 investors, a company has the option of refunding the investors with interest and no penal action would be taken. However, even after the above amendment, RBL’s past issuances continued to be in violation of the norms as the bank had issued shares to more than 200 people.
According to another person aware of the development, Sebi’s conditional approval requires RBL to take a corrective action to resolve the past violation. “The company will be required to undertake a scheme to provide an exit opportunity to investors who had subscribed to shares in these past rounds. The final approval will come in only once this scheme is executed,” he said.
Rajeev Ahuja, head of strategy, retail, financial inclusion and transaction banking at RBL Bank declined to comment on the development.
RBL Bank is planning to raise Rs.1,100 crore through its IPO.
Kotak Investment Banking, an arm of Kotak Mahindra Capital Company Ltd, Axis Capital Ltd, Citigroup Global Markets India Pvt. Ltd, Morgan Stanley India, investment banking division of HDFC Bank Ltd, and ICICI Securities Ltd, IIFL Holdings, IDFC Securities Ltd, and SBI Capital Markets Ltd are financial advisers to the public issue.
On 21 December 2015, RBL Bank raised Rs.488 crore through a pre-IPO round of fundraising.
The private lender raised the funds from international investors, including the Asian Development Bank (ADB) and the UK government’s development finance arm CDC Group Plc, among others.
In 2014-15, the bank reported revenue of Rs.2,356.4 crore, compared with Rs.1,612.5 crore in the previous year. It reported a profit of Rs.208.4 crore as against a profit of Rs.92.8 crore a year ago.
Over the last three years, global and local private equity and development funds have invested more than Rs.1,400 crore in the bank in three tranches.
Housing Development Finance Corp. Ltd (HDFC), Norwest Venture Partners, Samara Capital, Beacon Capital, Faering Capital, TVS Shriram, Cartica Capital, Ascent Capital, Aditya Birla Private Equity, IDFC’s Spice Fund and ICICI’s Emerging India Fund are among its shareholders.
Though RBL Bank is an old private sector bank established in 1943, it has accelerated its growth under a new management, led by managing director and chief executive officer Vishwavir Ahuja since 2010. In the last three years, the bank has shed its regional image, opened branches and attracted new investors.
