markets

IDBI Bank said to select arrangers for $896 million share sale

Deal is expected to include an institutional share sale and a separate offering of preferential securities

Bloomberg
15:38 September 17, 2016

Mumbai: IDBI Bank Ltd, the state-backed Indian lender, picked arrangers including Citigroup Inc., Credit Suisse Group AG and Deutsche Bank AG to manage a share sale of about 60 billion rupees ($896 million), people with knowledge of the matter said.

The Mumbai-based bank also chose HSBC Holdings Plc, JPMorgan Chase & Co., SBI Capital Markets Ltd and IDBI Capital Market Services Ltd, according to the people, who asked not to be identified because the information is private.

The deal is expected to include an institutional share sale and a separate offering of preferential securities, people with knowledge of the matter said earlier Friday. The preferential shares could be sold to a large investor who may also take over management of the bank, according to those people.

IDBI Bank’s fund-raising could help bolster its balance sheet and rein in bad debts that totalled 7.47 per cent of loans at the end of June, according to a presentation on its website. IDBI had a capital adequacy ratio of 11.80 per cent, compared with 13.2 per cent for the country’s banking system as of March, according to the Reserve Bank of India.

Representatives for IDBI Bank didn’t immediately answer phone calls and e-mails seeking comment on the selection of arrangers. IDBI Bank has solicited bids for capital-raising advice, the lender said in an emailed response to Bloomberg queries on the fund-raising plan earlier Friday.

“The mandate would cover an advisory on the possible avenues for mobilising part or whole of this amount,” the bank said in the statement. “At this stage it is not possible to comment on the actual structuring or timing of transactions.”

In January, IDBI Bank was planning a smaller institutional share sale of as much as 37.7 billion rupees, though it didn’t proceed with the offering at that time, people with knowledge of the matter said earlier. It had approached investors including the World Bank’s International Finance Corp., according to the people.

IDBI Bank shareholders in July approved raising as much as 80 billion rupees through fund-raising methods that could include a mix of a rights issue, preferential stock offering and an institutional share placement.