Dhanlaxmi Bank Ltd is raising Rs 200 crore through preferential allotment after a similar effort last month flopped. The board of the Thrissur-based private bank is expected to clear the proposal when it meets on June 7.
"The Reserve Bank of India had given the bank permission to raise Rs 300 crore, and the bank raised around Rs 100 crore through various tranches," said one official close to the development.
When contacted by dna, P G Jayakumar, MD and CEO, refused to comment, adding that he would be able to discuss only after the board meeting scheduled for June 7.
Mumbai-based Elara Consultants has been retained for the issue, said another official. Motilal Oswal Securities, which co-managed the earlier preferential allotment, has been dropped, he said.
The move by the bank follows its failed fund-raising attempt a month ago, after a group of investors from Mumbai snubbed the lender at the last hour. While the initial plan was to raise around Rs 233 crore, the bank could raise only Rs 30 crore from a couple of investors in the process. While Kapil Wadhawan, chairman and MD of Mumbai-based Dewan Housing Finance Corp Ltd, picked up around 3.34%, NRI businessman Ravi Pillai raised his stake to 4.9%.
All other investors from Mumbai decided against investing in the bank.
The fund-raising was meant to build a buffer with a higher capital adequacy ratio. Though it has a capital adequacy ratio (CAR) of around 10.8%, much above the RBI-mandated 9%, the bank's effort has been to push it up to 13%. The preferential issue would have helped the bank's CAR go over 13%, and meet growing business needs and facilitate the additional capital requirements under the Basel II norms.
Several banks are raising funds through qualified institutional placements (QIPs) and preferential allotments. "In general, banks are trying to improve their capital adequacy. Higher non-performing asset (NPA) is creating a big problem for banks. Most of them need a dose of capital," said a Mumbai-based investment banker, which recently advised YES Bank to raise $500 million in QIP.
"There is no dearth of investors, foreign and Indian, who are ready to invest in banks. The successful YES Bank QIP issue has brought interest levels back into banks, especially well-run private banks," he said.
According to Dhanlaxmi Bank officials, the 87-year old lender is trying to expand into micro-financing, gold financing, retail banking, agriculture lending and SMEs.