IndusInd Bank promoters to infuse Rs 2,700 crore via warrants

MUMBAI: The Hindujas will pump another Rs 2,700 crore into IndusInd Bank through a warrant issue to ramp up the promoter holding after the merger of Bharat Financial, a senior executive from the private lender has said.

The merger between the bank and the micro-lender, which will be effective July 4, is accretive from profit, margin and return on equity perspective. Our promoters will infuse Rs 2,700 crore to get their stake back to 15%, strategy head at the bank Sanjay Mallik said.

He said a fourth of the money will come immediately after the merger, while the rest will come over the next 18 months. The promoters will be subscribing to the warrants at a premium of Rs 1,709 a share as against the Friday’s close of Rs 1,449 on the BSE, Mallik said.

He explained that dilution of their stake to about 13% due to the merger with micro-lender is making it possible for the promoters to subscribe to the warrants and increase their holding to 15%, which is the cap set by the regulator. The merger of Bharat Financial into the bank was announced in October 2017, as part of which a shareholder would get 639 shares of Indusind Bank for every 1,000 shares of the micro-lender. Apart from the promoter’s infusion, the bank’s capital base will also benefit through the Rs 4,200-crore net worth of the merged entity, Mallik said.

The merger and subsequent promoter infusion will push the capital base by $1 billion, he said, adding the capital buffers will increase by 3 percentage points through this. As Bharat Financial will constitute 7% of the bank balance sheet postmerger, our margins will go up by 0.3-0.4%, Mallik said.