India’s RBL Bank readies domestic IPO

The Kolhapur-headquartered lender is set to become the sixth private sector bank to list on a local stock exchange.

India's RBL Bank plans to raise Rs12.1 billion ($182 million) through the sale of existing and new shares in a domestic initial public offering, providing yet another lift to the already robust equity deal flow in the country this year.

The listing of shares in the Kolhapur-headquartered lender was announced on Wednesday and is slated for August 31.

The IPO will make RBL only the sixth listed private-sector bank in a country where most such banks are majority-owned by the government.

It will join Axis Bank, Yes Bank, HDFC Bank, Indusind Bank and Kotak Mahindra Bank among listed private sector banks, with a seventh, Catholic Syrian Bank, also planning to list its shares on local exchanges later this year.

The bank's management is launching the share sale at a time of improving foreign investor sentiment. Since the 2014 general election, newly elected Prime Minister Narendra Modi has undertaken measures to reduce India’s current account deficit and stabilise the rupee, leading to a rebound in capital inflows and restored foreign interest in Indian assets.

According to Dealogic, year-to-date India new listing volume has more than doubled to $1.5 billion from $730 million from the same period last year.

At $182 million, RBL Bank will be the third biggest Indian IPO this year behind those of Equitas Holdings and L&T Infotech.

RBL Bank's listing also reflects the slow opening up of the banking industry in India since 1991, when then-finance minister Manmohan Singh permitted the first banks outside the public sector under his New Economic Policy to encourage private entrepreneurship and deregulation of markets.


Formerly known as Ratnakar Bank, RBL Bank is one of India's oldest private sector banks and was originally based in the western states of Maharashtra and Karnataka.

In recent years the commercial lender has rapidly expanded its footprint outside its core regions. According to its red herring prospectus, the bank opened 59 branches over the last two years in key cities such as Kolkata, Delhi, Chennai and Bangalore.

The strategy has expanded the number of branches outside Maharashtra and Karnataka to 71, accounting for about 40% of its 183 branches across the country.

In recent years, RBL Bank has been the fastest growing private lender in India, with post-tax profit rising at a compound annual growth rate of 106% over the last five years, suggesting the strategy may be bearing fruit.

RBL Bank said it planned to further accelerate expansion outside its core regions and had identified several key growth markets, including Delhi, National Capital Region, Punjab and Haryana in the North, Tamil Nadu in the South, and West Bengal in the East.

Lending remains the primary business of RBL Bank although it has diversified its income stream following the acquisition of Royal Bank of Scotland’s India business in 2013, including taking on the Scottish bank’s credit card and mortgage portfolio businesses.


RBL Bank is targeting $125 million from the sale of 37 million shares at a tight price band of Rs224 to Rs 225 per share. Concurrently a group of existing shareholders, including Beacon India Private Equity and GPE India, will be selling 17 million shares to raise as much as $57 million.

The price band represents roughly a 15% premium to RBL Bank shares sold in a pre-IPO placement in December last year, when the bank sold 25 million shares at Rs195 each to a group of private investors.

Based on the price band, RBL Bank will be valued at approximately 2.96 times net book value as of the end of March last year, which puts it at a discount to the majority of private sector banks currently listed on the National Stock Exchange.

According to the deal timetable, RBL Bank is scheduled to take institutional orders between August 19 and August 23, and list on both National Stock Exchange and Bombay Stock Exchange on August 31.

Kotak Investment Banking, Axis Capital, Citigroup and Morgan Stanley are the global coordinators and bookrunning lead managers.

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