India's IDFC Bank looks to raise 20 billion rupees in fiscal 2024 - source

IDFC First Bank

20/07/2023 10:33

By Ira Dugal
       MUMBAI, July 20 (Reuters) - India's IDFC First Bank
 IDFB.NS  is looking to raise 20 billion rupees ($243.84
million) in equity capital in the second half of the current
financial year, a source familiar with the matter said.
    The fund raise follows a reverse merger between parent IDFC
Ltd and IDFC First Bank announced earlier this month.
    IDFC First Bank has board approval to raise 40 billion
rupees. It has already raised close to half that amount through
a preferential allotment to IDFC Ltd.
    The remaining amount of about 20 billion rupees will be
raised in the second half, the source, who declined to be
identified as discussions are private, said. IDFC First Bank
declined to comment. 
    Shares of the lender have gained 33% so far this year
compared to the Nifty banking index, which is up 6.4%.
    Over the past three years, IDFC Bank has brought down its
bad loans and accelerated deposit accretion to strengthen its
fundamentals, allowing it to raise institutional capital with
ease, said the source. 
    "This will help fund the bank's growth."
    Its deposit base has risen 47% over a year ago to 1.4
trillion rupees as of March 2023, while its loan book of 1.6
trillion, which was weighed down by infrastructure loans, is now
heavily weighted in favour of more healthy retail loans.
    Gross bad loans have fallen to 1.65% from 4% in March 2021.
    IDFC Bank can grow 25% on a compounded annual basis and gain
market share, said brokerage house Emkay in report dated July 7.
    It is expected to deliver a return on assets (RoA) of
1.3-1.5% and a return on equity of 12-15% over the next three
years despite factoring in capital raise, the brokerage house
said.
    Following the reverse merger, shareholders of IDFC will be
direct shareholders in IDFC Bank, including the Government of
India, which will hold close to 11% in the bank.
    The government is not likely to seek a seat on the bank's
board, the person said.
    

($1 = 82.0200 Indian rupees)

 (Reporting by Ira Dugal; Editing by Nivedita Bhattacharjee)
 ((Ira.Dugal@thomsonreuters.com; +91-9833024892;))