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IDFC may not look at raising capital despite the shareholders approval for an enabling resolution to raise equity worth ₹2,000 crore through a follow-on public offering (FPO) or qualified institutional placement (QIP).
The approval will help IDFC sell shares to Indian investors in one or more tranches, according to the company filing with the exchanges.
The capital raising is largely to bring down foreign ownership to under 50 per cent, according to the RBI requirement for a bank.
“It would not be appropriate to raise the entire ₹2,000 crore as we are quite comfortable with our capital right now,” said Sunil Kakar, Group Chief Financial Officer, IDFC.
“We have appropriate level of capital right now. Also, raising more capital would further complicate transfer of capital between the bank and non-bank entity post the demerger,” Kakar said, adding that if asset growth picks up substantially, the company may need to raise funds.
He said that the enabling resolution is based on the regulatory requirement to reduce foreign shareholding. “We would see if the foreign shareholding comes down through the market. Then the capital need not be raised,” Kakar said.
FII ownership in the soon-to-be-turned-into-bank IDFC was at 51.81 per cent towards the end of June, according to the BSE website.
Dilution to the tune of about ₹850 crore would be further needed to bring down this foreign shareholding, Kakar had said in a post-results conference.
As on June end, IDFC’s capital adequacy ratio was at a comfortable 23.9 per cent, of which Tier-I capital is 21.6 per cent.
The infrastructure finance company also approved raising ₹80,000 crore of debt through private placement of non-convertible securities, including non-convertible debentures and commercial papers, “with a view to augment the business of the company.”
IDFC got an in-principle approval for licence from RBI on April 2 to start a bank and the lender has indicated that it will start bank operations around October 2015. In the meantime, it will complete the demerger of IDFC and IDFC Bank within six to nine months.
On Wednesday, shares of IDFC ended weaker at ₹141.15, down 1.36 per cent, on the BSE.
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