November 10, 2017 / 11:50 AM / a year ago

India's Axis Bank to raise $1.8 billion from investors including Bain Capital, LIC

MUMBAI (Reuters) - India’s Axis Bank Ltd (AXBK.NS) is to raise 116.26 billion rupees ($1.8 billion) to further strengthen its capital base by selling shares and warrants to a group of investors including Bain Capital and top Indian insurer Life Insurance Corp (LIC).

Axis Bank's logo is seen next to ATM machines at its corporate headquarters in Mumbai, India July 25, 2017. REUTERS/Danish Siddiqui

Axis Bank said in a filing that its board had approved the sale of up to 172.63 million shares at 525 rupees each, and 45.36 million convertible warrants at 565 rupees each on a preferential basis.

Ahead of the news Axis shares had closed 0.8 percent higher at 544.80 rupees in a Mumbai market that gained 0.1 percent.

The stock is up 21 percent so far in 2017, underperforming a 40 percent rise in the banking sector index and a 26 percent gain in the main market index .NSEI.

The fundraising “will bolster the capital adequacy of the bank, thereby providing growth capital for the core business ... and its subsidiaries,” the Mumbai-based lender said in a statement on Friday, after securing its board’s approval for the deal.

The capital raising comes after the lender, India’s third-biggest among private sector banks and seventh-biggest overall by assets, saw its bad loans surge in the second quarter to Sept.30 after a central bank audit.

While 21 state-run lenders account for bulk of India’s record $146 billion soured loans, some of the private sector lenders have also seen defaults rising in the recent quarters.

Despite the rise in bad loans Axis Bank’s capital adequacy ratio stood at 16.32 percent of assets at the end of September.

The bank will raise 90.63 billion rupees from the share sale and 25.63 billion rupees from the sale of warrants.

Affiliates of Bain Capital will invest 68.54 billion rupees in the bank, while LIC, which is owned by the Indian government and already owns a stake in Axis, will invest 15.83 billion rupees.

The bank will put the fund-raising plan to a shareholders’ vote on Dec. 8, it said.

Axis Bank’s investment banking arm Axis Capital advised it on the deal, while JP Morgan advised Bain Capital.

($1 = 65.1525 Indian rupees)

Reporting by Devidutta Tripathy and Swati Bhat; Editing by Subhranshu Sahu, Greg Mahlich

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