The move by Dhanlaxmi Bank Ltd, a private sector lender from Kerala, to raise around Rs 233 crore through preferential allotment has flopped as a group of investors from Mumbai decided against investing in the bank.
The bank, which managed to raise about Rs 30 crore from a couple of investors, is now in the process of raising Rs 200 crore through another preferential allotment. Kapil Wadhawan, chairman and MD of Mumbai-based Dewan Housing Finance Corp Ltd (DHFL), picked up around 3.34%, but all others – Bimal N Mehta, Ashok J Jain, Pinki K Thakural, Parmindar Singh, Kalpesh M Mehta, Sumit Bakshi, Suraj A Muchhalla and Mahesh Dalal – decided against investing in the bank.
NRI business tycoon Ravi Pillai, who is already one of the single-largest shareholders holding 4.17% stake, participated in the issue and raised his stake to 4.9%. In all, the bank was planning to issue 59.6 million equity shares in total to a group of 10 individual investors, at Rs 39 per share.
Motilal Oswal and Elara Capital were the merchant bankers for the issue.
"We are now looking to raise Rs 200 crore from another set of investors via a preferential issue. We will seek the board's approval before May-end and raise funds in this quarter," PG Jayakumar, the bank's managing director and CEO, told dna, Another bank official said the plan was to build a buffer with a higher capital adequacy ratio. "We are not short of capital adequacy and have around 10.8%, much above the RBI-mandated 9%," he said.
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.
According to the bank's filing with stock exchanges, the issue could have taken the stake of resident investors to 47%, foreign institutional investors 22.79% and non-resident Indian investors 20.77% of the expanded equity base.
In 2013, the bank raised Rs 51 crore from a clutch of private investors, including Pillai. Subsequently, in December, it raised Rs 67.2 crore through a qualified institutional placement (QIP). The 87-year old Dhanlaxmi Bank, incorporated in 1927 at Thrissur, Kerala, is making a serious effort to expand into micro-financing, gold financing, retail banking, agriculture lending and SMEs. "Our CASA (current account, savings account) has improved to 22% from the earlier 16-17%, while retail deposits have surged to 55% from earlier 25-30%. We have completely eliminated buyout advances, and now focusing more on gold (which now accounts for 18% of total advances) and micro-financing (7-8% now). Our NPAs are at around 5% at gross level and 3% at net level. Efforts are on to contain the NPA growth," said Jayakumar.
With a wide network of 280 branches and 396 ATMs covering 160 centres across 14 states, the bank services a broad customer base of 1.6 million.
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