Rbl Bank may be sold soon.
After Yes Bank, now another private bank is soon going to go into foreign hands. This time the big banks of the Middle East seem to be at the forefront of this race. UAE’s second-largest bank, Emirates NBD Bank PJSC, is in the final stages of talks with RBL Bank to finalize an investment of Rs 15,000 crore ($1.7 billion) and become the largest and controlling shareholder, ET reported, sources close to the matter said.
He said that this investment will be in the form of preferential allotment of equity shares and warrants, after which an open offer will be made for additional 26 per cent stake. This entire investment will be made through primary capital investment to help in the recapitalization of the bank. The current market cap of RBL is Rs 17,786.8 crore. Upon completion of this process, Emirates NBD is expected to hold 51 per cent of the expanded equity capital base.
When can the deal be announced?
One of the people quoted said the RBI had given in-principle approval to the control change in recent weeks. This transaction will expand Emirates NBD’s presence in Asia and help it establish a stronger position in the high-growth India-West Asia remittance market. According to RBI data, Indians living in Gulf Cooperation Council (GCC) countries constitute almost half of the country’s overseas migrants. Of the $38.7 billion sent from Gulf countries to India in FY 2024, half of the contribution came from UAE. It is the second largest source of inward money for India.
RBL has a board meeting on October 18, in which the quarterly and half-yearly results ending in September will be approved. Cited sources said that a formal announcement could be made at that time or even before that. Kolhapur-based RBL is 100 per cent public, in which several domestic institutions and mutual funds have minority stakes. There is no official statement yet from Sharad Agarwal, CEO of Emirates NBD and RBL Bank in India. EY and JP Morgan are acting as advisors in this transaction.
RBL shares at record level
RBL Bank shares have seen a rise of 6.58 percent in the last month. Due to this deal, the bank’s shares have seen a rise of about 86 percent in the current year. Due to which RBL Bank has become the best performing stock among listed bank stocks. On Tuesday, the bank’s shares are trading at Rs 293.35 on BSE with a rise of more than 1 percent. The special thing is that during the trading session the bank’s shares reached a 52-week high of Rs 299.65. According to the information, the structure of this deal will be similar to the recent IHC-Samman Capital deal, which will include preferential allotment and open offer after warrants. “The talks started when the stock was at Rs 220 level, so it is unlikely to get a premium over the current prices.
Many banking deals have been done in the country
The deal between RBL and UAE bank will be one of the three largest banking deals in India. Earlier this year, Japan’s SMBC bought a significant 20 per cent minority stake in Yes Bank, the first step towards achieving majority ownership. SMBC had bet $2 billion to acquire 74.9 percent stake in non-banking finance company (NBFC) Fullerton India Credit in 2021. ET had reported on October 1 that Mitsubishi UFG Financial Group (MUFG) is in active talks to buy 20 percent stake in Shriram Finance for about Rs 23,200 crore ($2.6 billion).
What do RBI’s FDI rules say?
Current FDI rules allow total foreign participation in Indian private banks up to 74 per cent, with each unit’s stake limited to 15 per cent. FDI rules do not allow any foreign bank to take controlling stake in an Indian lender. However, the RBI has made some exceptions, including Prem Vatsa’s Fairfax’s acquisition of 51 per cent stake in ailing Catholic Syrian Bank in 2018 or DBS’s acquisition of Lakshmi Vilas Bank in 2020. However, quoted sources said there will be no relaxation in the RBI’s stance on voting rights, which is currently limited to 26 per cent.