CET 1 to improve to 15.3% from 13.3%

Private sector lender IDFC First Bank has decided to raise equity capital of ₹2,000 crore by way of a preferential issue to five investors — ICICI Prudential Life Insurance Company, HDFC Life Insurance Company, Bajaj Allianz Life Insurance, Dayside Investment of the Warburg Pincus group, and to its promoter, IDFC Ltd., the lender said on Friday.

The board of the bank which met on Friday has approved the proposal.

The bank will allot 86.24 crore equity shares with a face value of ₹10 to these five investors at ₹23.19 a share, compared with Thursday’s closing price of ₹21.90. Stock markets were closed on Friday.

IDFC First Bank said that Dayside Investments Ltd., along with Cloverdell Investment Ltd., both Warburg Pincus LLC Group entities, holds 9.92% of the pre-issue shareholding and will hold 9.93% of the post-issue shareholding of the bank.

The post issue shareholding of ICICI Prudential will be 4.56% in the bank, while HDFC Life will have 1.52%, and Bajaj Allianz Life Insurance will have 1.76%. Parent IDFC’s shareholding will remain at 40%. “The networth of the bank post the issue and as added to the networth as of December 31, 2019 will be ₹17,240 crore,” IDFC First Bank said.

The bank’s common equity tier-I (CET1), which was 13.28% on December 31, 2019, will improve to 15.3% post the capital raising. The lender said it would use this capital to power growth, to continue to invest in liabilities and asset franchise, technology and infrastructure platforms to expand reach, among other things.