India's Axis Bank to sell shares to founders

MUMBAI, Aug 12 (Reuters) - Indian private sector Axis Bank (AXBK.BO) plans to issue 10.83 million shares, worth about $190 million at current prices, to its founders as part of a larger share sale plan to beef up its capital base.

"The bank has continued to grow strongly over the last few years and foresees a demand for credit in various sectors including the retail banking segment," the bank said in a note to investors.

"Success in encashing this business opportunity rests on the ability to raise funds by way of equity," it said.

The lender has sought shareholder approval to sell a total of 71.4 million shares through private placement to institutions or global depositary receipts. At current prices the share sale would raise up to $1.25 billion.

An economic revival has made companies to revisit expansion plans, fueling demand for loans and prompting banks to raise capital.

Earlier sources said smaller rival IndusInd Bank (INBK.BO) sold shares worth $100 million to institutions. [ID:nBOM527447]

Axis Bank said shares would be issued to founders, state-owned Life Insurance Corp, General Insurance Corp and four general insurance firms to allow them to maintain their 15.16 percent holding.

Another founder and the largest shareholder, government-controlled Specified Undertaking of UTI, will not participate in the offering and its stake will fall to 22.54 percent from 27.02 percent, Axis Bank said in the note.

Axis Bank, which the market values at $6.5 billion, was trading down 2.2 percent at 847.50 rupees by 0800 GMT in a weak Mumbai market.

The shares have risen 68 percent so far this year compared to a 53 percent rise for the benchmark .BSESN (Reporting by Narayanan Somasundaram; Editing by Ranjit Gangadharan)