Bandhan Bank Promoters to Raise Rs 10,500 Crore through Secondary Market Sale

Bandhan Bank, a leading Indian banking and financial services company, is gearing up to raise approximately Rs 10,500 crore by selling shares in the secondary market on Monday. This transaction will reportedly translate into a price that is around 10% lower than the stock's closing price on Friday. The sale will see Bandhan Financial Holdings, a promoter group entity, disposing of close to 20% of its stake in the company. JP Morgan, Credit Suisse, and Goldman Sachs have been entrusted with the formal process of selling the shares.

Key Takeaways:

• The promoters of Bandhan Bank plan to sell approximately 337.4 million shares in the open market, setting a floor price of Rs 311 per share.
• The transaction aims to reduce the promoter holding to comply with central bank regulations, which currently stand at 60.95%.
• The regulatory bar on promoter ownership threshold for private banks mandates a reduction to 40% within three years and 20% in 10 years, as stated by the RBI's bank licence rules.
• Bandhan Bank's expansion plans are linked to compliance with these regulatory requirements, with the bank currently operating 1,100 branches.
• The sale follows a similar deal by Kotak Mahindra Bank, which raised nearly $2 billion by selling shares to institutions in two separate secondary market deals last month.
• The secondary market sale demonstrates the need for promoters to comply with RBI regulations and the willingness of major banks to adapt to regulatory requirements.

Statistics:

• Rs 10,500 crore: The approximate amount to be raised by Bandhan Bank through the secondary market sale.
• 10%: The reduction in price compared to the stock's closing price on Friday.
• 337.4 million: The number of shares to be sold in the open market.
• 18.11%: The promoter holding in Bandhan Bank after the share sale.
• 60.95%: The current promoter holding in Bandhan Bank.
• 40%: The promoter holding threshold allowed for private banks within three years.
• 20%: The promoter holding threshold allowed for private banks within ten years.
• 1,100: The number of branches operated by Bandhan Bank currently.

Sources:

• ET (Economic Times): The source for information on the secondary market sale of Bandhan Bank shares.
• Times content: The source for reprint rights.
• RBI (Reserve Bank of India): The source for regulatory requirements and bank licence rules.
• Kotak Mahindra Bank: The source for information on their similar secondary market deal last month.