Axis Bank, the third biggest private lender in India, has been in talks with Bain Capital to raise approx ₹4800-₹6500 Crores ($750 Million – $1 Billion). If the deal goes through, this will be the biggest private equity deal in Indian banking space. The development comes at a time when the bank is under the radar of regulatory authorities for increase NPAs (Non-Performing Assets) and bad loans.
Bain Capital is eying to own up to 5% of Axis Bank post the deal and as a part of the deal, the bank will issue its preferential shares to the capital firm. According to a number of sources, Bain Capital is also considering to buy the stake from some of the existing investors. If that happens, Bain will reportedly be investing up to ₹10,000 Crores ($1.5 Billion) and will own 10% of Axis post-investment. JP Morgan is advising Axis Bank with the deal and it is expected to be closed before the end of this year. The deal will, however, need the approval of RBI.
Axis Bank currently boasts of a market cap of ₹1.16 lakh crores. Specified Undertaking of Unit Trust of India – or SUUTI – the promoters of Axis Bank own 30.35% and private investors, including Government of Singapore Investment Corporation and Abu Dhabi Investment Authority, own 49.13%.
This will not be the first time for an Indian bank to raise foreign funds. Earlier, lenders like Kotak Mahindra Bank, ICICI Bank, Karur Vysya Bank and Yes Bank have raised money from the foreign investors.