RBL Bank starts IPO roadshows after conditional approval

RBL Bank starts IPO roadshows after conditional approval

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RBL Bank has started meeting with institutional investors and conducting roadshows to sell its upcoming IPO. The company is pitching the IPO to foreign as well as domestic investors and roadshows are being conducted across Asia-Pacific, the US and the UK, said a report citing two people familiar with the matter.RBL Bank

The company, formerly Ratnakar Bank, is yet to get a final approval from SEBI to launch its IPO but had received a conditional go-ahead from the regulator in April. The regulator has asked the bank to offer an optional exit opportunity to its existing investors as its condition for approving the IPO which has got tangled into legalities due to past violations.

Read Also: More clarifications required before RBL Bank launches IPO

The bank’s IPO is likely to raise at least INR13 billion (INR1,300 crore), although it may end up mobilizing INR15 billion on the upside. The IPO will be managed by Kotak Mahindra Capital, Axis Capital, Citigroup, Morgan Stanley, HDFC Bank, ICICI Securities, IDFC Securities, IIFL Holdings and SBI Capital Markets.

The IPO will mark first public sale of shares of an Indian bank in several years. The IPO is crucial for Beacon India Private Equity Fund which plans to sell its entire holding of 9.5 million (95.05 lakh) shares in the bank while GPE India also aims to reduce its shareholding.

Past violations by RBL Bank

RBL Bank filed its prospectus for the IPO in June 2015 but has not got regulatory approval so far due to past securities market-related violations. In its draft prospectus filed with SEBI, the company said the then Ratnakar Bank first issued shares to 2,591 investors in February 2003. This allocation was the unsubscribed portion of a rights issue. In a similar transaction, unsubscribed portion of another rights issue was allotted to 1,969 investors in March 2006. The bank made a preferential allotment of 252,000 shares to 352 persons in 2006.

Read Also: RBL Bank files prospectus for INR1,100 crore IPO

The bank issued shares to meet Reserve Bank of India (RBI) requirements of expanding share capital. However, these issuances of securities were violations the rules laid out by SEBI and the Companies Act (1956) on public offerings. According to the Companies Act (1956), offer made to more than 49 people is deemed a public issue and thus, requires the nod of market regulator. Although this limit has been increased to 200 people in the new Act of 2013, old laws are applicable on back-dated transactions.

Similar share issuances were made by Thyrocare Technologies which also faced regulatory challenges but subsequently, the IPO was cleared and it led to a successful debut of the diagnostics chain. With SEBI offering a solution for the deeds of past management, it appears the RBL Bank IPO will become a reality in the coming months.

Read Also: RBL Bank IPO delayed after Thyrocare-like issuances

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