Hinduja group-owned IndusInd International Holdings Ltd. (IIHL), the promoter of IndusInd Bank Limited (NSEI:INDUSINDBK), announced on July 3, 2023 its plans to raise $1.5 billion (about INR 123,000 million) to increase its stake in the lender to 26% from the current 15% as well as fund its proposed acquisition of debt-laden Reliance Capital Limited (NSEI:RELCAPITAL). IIHL said in a statement that the strategic decision of its board âopens boundless opportunitiesâ to expand its business horizon in India and other global geographies in the banking, financial services and insurance (BFSI) sector. âOur aspirations will not be capital constrained as raising capital for IIHL is not an issue at all,â Ashok P Hinduja, chairman of IIHL, was quoted as saying in the statement.
The promoters of IndusInd Bank are eligible to increase their shareholding in the bank, subject to the assessment of âfit and properâ status by the Reserve Bank of India (RBI). Accordingly, the board of directors resolved to âundertake capital raise in a phased mannerâ to mobilise the required funds for infusion, the statement said. In November 2021, the RBI allowed promoters to hold up to 26% stake in banks, up from the previous cap of 15%.
The decision came following recommendations from an internal working group, which had reviewed the ownership and corporate structures of private sector banks. Referring to Reliance Capitalâs acquisition, IIHL said the administrator of the company had issued the duly signed letter of intent.