IDFC First Bank To Raise Rs 3,200 Crore Through Preferential Issue

IDFC First Bank Ltd. on Thursday approved fundraising of Rs 3,200 crore through preferential allotment of shares. The lender will be issuing 39.68 crore shares to marquee investors at a price of Rs 80.63 per share, the private lender said in an exchange filing.

The fund raise has been priced at a premium of 4.51% to the last closing of Rs 77.15, prior to the board meeting.

Post-allotment, the issued and paid-up equity share capital will increase to 7,47,41,51,443 fully paid-up equity shares of Rs 10 each.

These proposed allottees include Life Insurance Corporation of India, HDFC Life Insurance, Aditya Birla Sun Life Insurance, Bajaj Allianz Life Insurance, ICICI Lombard General Insurance and SBI General Insurance.

Post this issue, LIC would have the largest share at 2.68%, followed by HDFC Life Insurance at 1.31% and Aditya Birla Sun Life Insurance at 1.06%.

"...47% of the proposed issue is going to be subscribed by Life Insurance Company (LIC) of India, which is the largest insurance company in India," the bank said in its filing.

The bank would utilise this capital for future growth prospects while taking into account the increase in risk weights as per the Reserve Bank of India's regulations from November 2023.

"After our last capital raise of Rs 3,000 crore, the RBI raised the risk weights on consumer credit exposures in November 2023, which consumed around 1% of the bank’s capital, the bank said, adding, "This capital is being raised prudently for future growth of the bank while factoring in the new risk weightages."

With this fundraise, the capital adequacy of the bank will increase from 16.11% to 17.49%, with the common equity tier-1 ratio at 14.74%.

Post this, the book value per share would increase by 4.11% to Rs 47.36 as the fundraise is at a price higher than the current BVPS, based on March 31, 2024 numbers.