IDBI Bank Ltd. is aiming to raise 60 billion rupees ($896 million) through a share sale as it seeks investors that could take over management of the state-backed Indian lender, people with knowledge of the matter said.
Investment banks met IDBI Bank this week in Mumbai to pitch for a role that is expected to include an institutional share sale and a separate offering of preferential securities, the people said. The preferential shares could be sold to a large investor who may also take over the management of the bank, according to the people, who asked not to be identified because the information is private.
The fundraising could help the Mumbai lender bolster its balance sheet and rein in bad debts that totaled 7.47 percent of loans at the end of June, according to a presentation on its website. IDBI had a capital adequacy ratio of 11.80 percent, compared with 13.2 percent for the country’s banking system as of March, according to the Reserve Bank of India.
IDBI Bank has solicited bids for capital-raising advice, the lender said in an e-mailed response to Bloomberg queries. “The mandate would cover an advisory on the possible avenues for mobilizing part or whole of this amount,” it said. “At this stage it is not possible to comment on the actual structuring or timing of transactions.”
The bank earlier appointed advisers for an institutional share sale of as much as 37.7 billion rupees, people with knowledge said in January. It had reached out to potential investors including the World Bank’s International Finance Corp., the people said.
IDBI Bank shareholders in July approved as much as 80 billion rupees of fundraising via a rights issue, preferential shares and/or an institutional share placement, according to stock exchange filings.