RBL Bank hardsells IPO with overseas roadshow

The bank is looking to raise Rs 1,300-1,500 cr after meeting all regulatory and statutory requirements

RBL Bank, which intends to hit the capital markets with its initial public offering (IPO) in the coming month, has begun roadshows to market its issue to institutional investors. The final clearance for the IPO from the Securities and Exchange Board of India (Sebi) is at an “advanced stage”, according to sources.

The roadshows are being conducted across Asia-Pacific, the US and the UK, said two people familiar with the matter. The bank, which is looking to raise Rs 1,300-1,500 crore after meeting all regulatory and statutory requirements, has now begun marketing the IPO to domestic investors as well.

A banker involved with the IPO declined to comment on the response to these road shows.

A road show involves the management of an IPO-bound company meeting and giving presentations to analysts, fund managers and potential investors of a company. An e-mail sent to RBL Bank about the progress of the IPO did not elicit a response.

The private sector lender recently settled a securities market-related violation with Sebi under the consent mechanism, bolstering its IPO plans. The bank paid Rs 47.6 lakh as part of the consent terms to Sebi and agreed to provide an exit opportunity to its investors.

Last month, the regulator had given a conditional go-ahead for the bank’s IPO as the bank was in breach of the ‘deemed public issue’ norm in the Companies Act, 2013.

According to RBL’s draft prospectus, it had allotted shares through a rights issue to 2,591 investors on February 19, 2003, and to 1,969 investors on March 13, 2006. Under the earlier Companies Act, 1956, an unlisted company wasn’t allowed to allot securities to more than 49 investors in a financial year. The Companies Act, 2013, raised the cap to 200 investors.

The 2013 Act gave a company having more than 49 investors and up to 200 investors the option of refunding with interest and without any penal action. However, even with the revised norms, the number of investors in the case of RBL was higher than the prescribed limit.

Apart from RBL Bank, Thyrocare Technologies with 200-odd investors, had faced a similar issue with Sebi for having breached the investor cap prescribed in the Companies Act, 2013. According to sources, Thyrocare and Sebi entered a consent settlement in which the former had to ensure buyback of certain shares from existing investors.

In December last year, Sebi had issued a clarification on this matter, providing more clarity to companies such as RBL and Thyrocare. It had said companies in breach of the public issue norm could escape a penalty if they offered refunds to investors at an amount not less than the allotment price, along with interest of 15 per cent annually.

Kotak Investment Banking, Citigroup Global Markets, Axis Capital, Morgan Stanley India, ICICI Securities, IIFL Holdings, IDFC Securities, SBI Capital Markets and the investment banking division of HDFC Bank are the merchant bankers managing the issue.

On December 21, 2015, RBL Bank reportedly raised Rs 488 crore in a pre-IPO round of fundraising. This includes funds from Asian Development Bank and CDC Group, the UK government’s development finance arm, among others.

SALES PUSH

• Final clearance for RBL Bank’s IPO from Sebi is at an “advanced stage”
   
• The bank has conducted roadshows across Asia Pacific, US and UK
   
• It has recently settled a securities market-related violation with Sebi under consent mechanism, bolstering IPO plans
  

 

Last month, the regulator gave a conditional go-ahead for the bank’s IPO for being in breach of the ‘deemed public issue’ norm in the Companies Act, 2013
 

On December 21, 2015 the bank reportedly raised Rs 488 crore in a pre-IPO round of fundraising