IndusInd Bank's share price jumps over 2% after US investor plans to double its stake

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IndusInd Bank's share price jumps over 2% after US investor plans to double its stake
US based hedge fund Route One Investment Company has the approval to double its investment in IndusInd Bank to 10%BCCL
  • IndusInd Bank’s share price rose by over 2% after plans of US-based hedge fund Route One Investment Company to double its stake in the financial institution were filed.
  • It currently holds 4.95% but wants to up the ante to 10% equity capital.
  • The Reserve Bank of India (RBI) and the bank’s board of directors have approved the acquisition.
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IndusInd bank’s share price jumped by over 2% in afternoon trade on July 24 after it announced that it will be selling over 5% stake to the US-based hedge fund Route One Investment Company (ROIC).

IndusInd Bank's share price jumps over 2% after US investor plans to double its stake
IndusInd's share price over the last one weekBSE/BI India

ROIC already holds 4.95% stake in IndusInd Bank but is now looking to double up with a 10% buy-in. As per the bank’s current market capitalisation, a 10% stake in IndusInd bank is valued at ₹ 3631.5 crore ($485 million).


After getting the Reserve Bank of India approval, which dictates that any acquisition of shareholding rights of 5% has to go through them first, IndusInd back also got the approval from the bank’s board of directors.

Fundraising to protect the balance sheet
IndusInd Bank, like most banks in the private sector, is currently shoring up capital to cushion against the slew of bad loans that may follow once the Reserve Bank of India’s (RBI) moratorium comes to an end on August 31.

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Big wigs like the State Bank of India (SBI) and ICICI Bank are doing this through selling their stake in their insurance arms, which includes ICICI Lombard, ICICI Life Insurance, SBI Life and SBI Card.

Loan growth is also expected to take a hit as businesses slow down in the wake of the economic downturn.

IndusInd Bank is yet to announce the date for revealing its first-quarter earnings. The bank’s moratorium books and credit quality will be key metrics to assess the impact of the lockdown and slowdown in business may hold for the bank.

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