Via share sale, IndusInd Bank to raise Rs 3,300 crore.

IndusInd Bank will raise Rs 3,288 crore by selling shares through a preferential issue at Rs 524 apiece to a set of institutional investors as it shores up its capital buffer amid COVID-linked uncertainties. The Hinduja Group, the promotors of the bank, will also subscribe to the issue to maintain their 15% stake.

US-based hedge fund Route One, which last week received the RBI's approval to raise its stake in the bank to 10%, will subscribe to a chunk of the issue, investing Rs 935 crore, followed by Rs 850 crore from ICICI Prudential Life Insurance.

Promotor group companies Hinduja Capital and IndusInd International will together invest Rs 792 crore to maintain their 15% holding.

Other investors are Tata Investment Corp, the investment arm of the Tata Group, an international insurance company AIA. They will invest Rs 300 crore and Rs 410 crore, respectively. 

"This capital-raise from long-term foreign as well as domestic investors is strategic for us as this helps us bolster the bank's balance sheet and position the bank well, as the economy gradually navigates out of the COVID-19 pandemic. The capital-raise also reflects the continued support and confidence that our promoters have in the bank," CEO Sumant Kathpali said.

In a conference call with reporters, Kathpalia said the bank has sufficient liquidity with a buffer of Rs 30,000 crore and that the fresh capital will be useful when the economy picks up in the latter half of the year. The issue price of Rs 524 apiece was at a slight discount to the stock's Tuesday closing price of Rs 527 on the BSE. Shares of the bank closed 4% higher, while the Sensex gained 1.47%.

The preferential issue of shares is subject to shareholder approval at the extraordinary general meeting called by the bank on August 25.

The capital adequacy of the bank will improve to 16.5% after the issue from 15.3% now, the bank said. "The bank will use this capital to continue to invest in liabilities and asset franchise, technology and infrastructure platforms, to expand the reach, product offerings, and to improve the customer experience whilst ensuring sustainable financial parameters," the bank said in a statement.