Axis Bank raises Rs 10,000 cr via QIP to absorb pandemic-related shocks
Private lender Axis Bank has raised Rs 10,000 crore through the qualified institutional placement of shares, which the lender will use to bolster its capital adequacy, fund its growth strategy and absorb any kind of risk emanating from the pandemic.
Shares of the bank were up 2.78 per cent to Rs 442.95 on the BSE, post the announcement.
In a statement, the bank said despite a challenging macroeconomic environment, the placement has witnessed strong reception from global and domestic investor communities, including several large foreign portfolio investors, domestic mutual funds and insurance companies. However, it did not disclose the names of these investors.
The issuance was oversubscribed with the aggregate final transaction size being Rs 10, 000 crores, it said. The QIP issuance was done at a price of Rs 420.1 per equity share, which is a 5 per cent discount to the floor price of Rs 442.19.
Recently many private-sector lenders have raised funds from the market to create a buffer s that they are in a position to absorb any kind of shock emanating from the pandemic. Yes, Bank recently raised Rs 15,000 crore, Kotak Mahindra Bank has raised Rs 7,440 crore and IDFC Bank has raised Rs 2,000 crore. ICICI Bank also intends to raise Rs 15,000 crore and has set the floor price for its QIP. Many state-owned lenders like Punjab National Bank, Bank of Baroda and Canara Bank are also in the process of raising funds.
Amitabh Chaudhry, MD & CEO Axis Bank, said the bank has received a great response from global and local investors alike.
“We believe the bank is well-placed to leverage all possible growth opportunities that will come in as the economy opens up and is in a strong position to combat the challenges that emanate from the Covid-19 pandemic crisis,” he added.
While there was some fear that bad loans might shoot up once the moratorium on repayments expired, RBI has now given a one-time restructuring window to banks which should soften the pandemic’s impact on their asset quality.
The bank’s capital adequacy stood at 17.29 per cent at the end of June quarter. Its gross non-performing assets (GNPA) were at 4.72 per cent, compared to 5.25 per cent in the year-ago quarter and 4.86 per cent in the fourth quarter of FY20.
According to Icra estimates, the additional capital requirement can be as high as Rs 45,000-82,500 crore for public sector banks during FY21 and Rs 25,000–48,300 crore for private banks during FY21-22. NBFCs may require capital to the tune of Rs 25,000-35,000 crore to absorb asset quality shocks and provide comfort to their lenders.
