IndusInd International Holdings Ltd (IIHL), a promoter entity of IndusInd Bank, said it plans to get itself listed overseas by September, having completed its capital raise through a rights issue. IIHL held a 11.24% stake in the bank as of 31 December, with another promoter entity, IndusInd Ltd, holding 3.43%.
“The listing of IIHL is being done for two reasons—longstanding commitment to its shareholders for value creation and the expectation of the Indian regulator to be a listed promoter entity,” an IIHL spokesperson said in an emailed statement. “IIHL is committed to convert itself into an operating listed structure by the first week of September. The work in this direction is progressing, and as soon as the jurisdiction is finalized, we shall update you,” the statement added.
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Some analysts believe that the listing plans could be part of the group’s decision to hike its stake in the bank to 26%, if the Reserve Bank of India (RBI) permits. At present, promoters need to eventually trim their holdings to 15% in private lenders. Last November, an internal working group set up by the central bank proposed raising the limit to 26%.
To be sure, the regulator has also allowed a higher stake, on a case-by-case basis: Kotak Mahindra Bank promoter Uday Kotak has been allowed to retain a 26% stake with voting rights capped at 15%.
In fact, IIHL said in its statement on Tuesday that its board has always wanted to increase the stake in IndusInd Bank to 26%.
“It is possible that IIHL wants to get listed in order to raise more funds and prepare the groundwork towards a higher stake in the bank. However, it is not quite certain at the moment,” an analyst at a domestic brokerage said on condition of anonymity.
Another analyst, who also did not wish to be named, said the listing plan was never discussed in investors’ meetings with the bank and has come as a surprise.
In its statement, IIHL said it has raised capital at an overwhelming premium of 1,400% towards the subscription of the rights issue.
The private sector lender had issued convertible warrants to its promoters and its subsidiary IndusInd Ltd on 6 July 2019 for a total of ₹2,695.26 crore. The promoters had paid ₹673.82 crore towards subscription of 25% warrants at ₹1,709 per share.
Last month, the Securities and Exchange Board of India (Sebi) allowed an additional two weeks to the bank’s promoters to infuse the residual capital with regard to conversion of warrants issued. The deadline was extended to 18 February.
“This reiterates the confidence of IIHL’s global shareholders, spread across 34 countries, in the decision of IIHL and its subsidiary, IndusInd Ltd, to redeem the balance of 75% of the warrants at the price of ₹1,709 per share (a huge premium over the current market price of ₹1,059), aggregating to ₹2,021.45 crore,” the statement added. Additionally, to support the redemption of warrants, IIHL said it has decided to monetize some of the other mature, non-core investments.