Dhanlaxmi Bank appoints QIP advisors

Dhanlaxmi Bank, one of the smallest private sector ones, has appointed IDFC-SSKI Securities and JM Financial Services as advisors for its Rs 350-crore qualified institutional placement of shares next month, its managing director and chief executive officer, Amitabh Chaturvedi, said in an interview on Wednesday.

The bank plans to raise the money by the third week of July to boost its lending. The two investment banks will begin the second round of negotiations with potential investors this week. Fresh fund inflow will help it give more loans and maintain capital adequacy at 12.5 per cent, even after growing advances to Rs 9,000 crore by March from Rs. 5,000 crore, he said.

Dhanlaxmi expects to sell its shares to local insurance companies, mutual funds, banks, besides overseas investors, diluting its equity capital by 23 per cent. The bank has capital of 6.4 million equity shares of Rs. 10 each. Foreign institutional investors own 24.9 per cent in the bank, 22.4 per cent is owned by local companies and 43.5 per cent is held by individual investors, Chaturvedi said.

As part of its growth plans, the 82-year-old bank, headquartered in Thrissur, Kerala, is increasing its focus on retail banking, offering individuals 'all retail products a bank can usually offer’, including personal loans, internet banking, depository services and credit cards, Chaturvedi said from his central Mumbai office, compared with just the loan and deposit functions about 18 months earlier. Retail banking will form about a third of the bank’s loans by March, compared with about 10 per cent now. Loans to large companies, and small and medium corporate, will form a third each of its loans by 2012, he said.

Chaturvedi, 42, a former group president at Reliance Capital and head of retail banking group at ICICI, says he took up the challenge of leading the bank on the suggestion of G N Bajpai, the former chairman of Life Insurance Corporation and the Securities and Exchange Board of India, and now chairman of Dhanlaxmi. Since taking charge in October 2008, Chaturvedi drew upon staff from various lenders, including Barclays, ICICI, HDFC and Kotak Mahindra for his senior team of 30-odd professionals.

The bank doubled its loans to Rs 5,000 crore since he took over 18 months earlier, he said. It plans to more than double the number of automatic teller machines to 1,000 by March, signing an eight-year agreement with an associate of Germany’s Wincor Nixdorf to pay only for usage of the machines and not having to buy these.