Emirates NBD acquiring controlling stake in RBL Bank for $3B
What's the story
Emirates NBD PJSC, the second-largest bank in the UAE, has announced a major investment in India's private banking sector. The bank has signed an agreement with RBL Bank to invest ₹26,850 crore (around $3 billion) for a controlling stake of up to 60%. This is the largest cross-border investment ever seen in an Indian private bank.
Transaction specifics
Investment through preferential issue
The investment by Emirates NBD will be made through a preferential issue, subject to regulatory approvals and customary closing conditions. Under this arrangement, up to 959.04 million shares will be allotted at ₹280 per share to Emirates NBD. This would give the bank a stake of up to 60% in RBL Bank. However, the final size of this allotment will depend on the foreign ownership limit at the time of issue.
Open offer
Mandatory open offer included
Along with the preferential allotment, Emirates NBD will also make a mandatory open offer to acquire up to 26% stake from RBL Bank's public shareholders. This is in line with the Securities and Exchange Board of India (SEBI)'s takeover regulations, and the open offer price has been fixed at ₹280 per share for up to 415.58 million shares.
Strategic alignment
Deal to merge Emirates NBD's India branches with RBL Bank
The deal also involves the merger of Emirates NBD's India branches with RBL Bank. After the transaction, Emirates NBD will become the promoter of RBL Bank and will have the right to nominate directors on its board. Shayne Nelson, Group CEO of Emirates NBD, said this investment is a testament to their confidence in India's vibrant economy.
Financial impact
Capital infusion to boost RBL Bank's growth prospects
The capital infusion from Emirates NBD will significantly strengthen RBL Bank's balance sheet and enhance its Tier-1 capital ratio. It will also provide long-term growth capital, enabling the bank to deepen its deposit franchise and expand its branch network. Post-transaction, RBL Bank's net worth will increase from ₹15,000 crore to ₹42,000 crore.