The bank proposes to simultaneously seek regulatory and federal approvals while it seeks shareholder nod for the majority takeover.
“It should be somewhere in the 5-8-month range,” R Subramaniakumar, MD & CEO, RBL Bank, told the media on Sunday.
Under the proposed structure, Emirates NBD’s open offer will precede the preferential allotment.
Agencies“The primary issuance is expected to be up to 60%. Depending on the response to the open offer, we must maintain the minimum 25% public shareholding as per Sebi guidelines. If the combined open offer and preferential stake exceed that limit, there will be a proportionate scale-down. However, we don’t expect the open offer to materially reduce the primary issuance,” explained Jaideep Iyer, head of strategy, RBL Bank.
According to Regulation 7(4) of the Sebi Takeover Code, if an open offer results in non-public shareholding exceeding 75%, the acquirer must either reduce it to the permissible level or scale down the acquisition to retain the company’s listed status. India’s Largest Banking FDI
Emirates NBD Bank PJSC, the second-largest bank in the UAE signed definitive agreement to invest $3 billion to acquire a majority stake in RBL Bank, making it largest banking acquisition by a foreign financial institution and the largest FDI inflow into India’s banking sector. The development comes at a time when Emirates NBD is said to have shown interest in acquiring 60% stake in IDBI Bank under the government’s plan to divest in it.
The capital infusion, via a preferential allotment at ₹280 per share, will give Emirates NBD a 60% stake in RBL’s expanded equity base. Bank management said open offer is also likely at ₹280 a share for an additional 26%. Given the 74% cap on foreign ownership in Indian banks, Emirates NBD will pare down its holding if the open offer is fully subscribed. Currently, about 22% of RBL’s shares are held by foreign investors, which will dilute to around 11% post the primary infusion.
Strategic Impact and Growth Outlook
RBL Bank’s management believes the partnership will significantly strengthen its balance sheet and growth trajectory.
“This transaction gives us the capital and capability to expand our corporate book, accelerate growth in retail and microfinance,” said Subramniakumar. “There are opportunities for doing a wealth management, because when they come with their international expertise on wealth management, we are foraying into that area,” he added.
“Having crossed the ₹1 lakh crore mark in our loan book, we now have the opportunity to propel growth across multiple segments.”
The bank management stated that the partnership will also expand RBL’s distribution network, enhance its digital payments capability, and open opportunities in the India-Middle East trade corridor.
MD & CEO also stated that the technology platforms for both are quite similar and on the same core banking platform which is Finacle from Infosys. Subramniakumar did not share when the negotiation with Emirates NBD started but stated, “We have been talking to all these people the day I just landed in the bank. And over a period of time some of them said that they are not interested in India. Then we chose the people who are interested in India. Last 2-3 months it has become intensive with the people concerned.”