The initial public offering of RBL Bank (formerly Ratnakar Bank) got fully subscribed on Monday, the second day of sale.
This is the first public issue by a private sector lender in a decade. The last private sector bank to hit the stock markets was Yes Bank in 2005.
The total issue size was of 37.9 million equity shares, but bids were received for almost 54.1 million shares or 143%, according to cumulative data available on stock exchanges as of 12:30 pm IST. The issue closes on Tuesday.
The price band for the issue has been fixed at Rs 224-225 per share and the bank is looking to raise around Rs 1,210 crore through the capital market listing.
On Thursday, RBL Bank raised Rs 364 crore by selling shares to 25 anchor investors at the upper end of the price band. The investors included Merrill Lynch Capital Markets Singapore, Government Pension Fund Global of Norway and Goldman Sachs India Fund among others.
The funds are to be used to augment the bank’s tier-I capital base to meet future capital requirements.
RBL Bank has emerged as one of the fastest growing private sector banks in the last six years and investors should “subscibe” to the issue, Siddharth Purohit of Angel Broking said.
“At the upper end of the price band, the stock is offered at 2.4 times its pre-IPO book value, while on post IPO BV, its offered at 2.1 times. We believe this issue is attractively priced taking into account the valuations at which other mid-sized private sector banks are currently trading,” he said.
With a strong management led by Vishwavir Ahuja, who previously served as MD and country CEO of Bank of America for the Indian subcontinent, the Kolhapur-based institution is transforming from a regional name into a more modern brand. RBL Bank’s retail deposits, the current account saving accounts (CASA), have been growing at 45%. A retail bank is a more stable and safe way to build a sustainable bank, experts said.
“The bank has grown its loan book at a CAGR of over 60% in the last five years with diversification. The bank has stayed away from stressed sector lending like steel, power and infra, which has helped it to maintain its asset quality at better levels compared to peers despite 60% loans in corporate and medium and small enterprise sector,” said Pritesh Bumb, analyst at Prabhudas Lilladher.
RBL Bank’s net non-performing assets stand at 0.6% of loans, while restructured book is small at 0.1% of loans, analysts point out. The industry average of net NPAs in India is 4.6% as of March 2016, according to the Reserve Bank of India.