Emirates NBD Bank to invest Rs.26,853 crore to acquire a majority stake in RBL Bank

Emirates NBD Bank will invest ₹26,853 crore to acquire a majority stake in RBL Bank, subject to regulatory approvals. The proposal depends on shareholder approval and necessary regulatory clearances from authorities such as the Reserve Bank of India, DPIIT, CCEA, Stock Exchanges, and CCI, along with other agreed conditions in the Investment Agreement.

This is the second incident in which foreign banks have invested large amounts of funds in Indian private sector banks. Earlier, Sumitomo Mitsui Banking Corporation (SMBC) of Japan acquired an additional 4.22% stake in the Mumbai-based bank. With the acquisition, SMBC’s stake in Yes Bank has increased from 20% to 24.22%. SMBC acquired 132.39 crore shares via off-market sale on September 22. With the acquisition, the total holding of the Japanese entity in the bank rose to 759.51 crore shares. With this transaction, SMBC has become Yes Bank‘s largest shareholder, while SBI continues to hold a significant stake of over 10%.

“Considered and Approved Fund raise of up to INR 268,53,27,78,080 (Twenty Six Thousand Eight Hundred and Fifty Three Crores Twenty Seven Lakhs Seventy Eight Thousand and Eighty) from Emirates NBD Bank (P.J.S.C) (“Investor”),” RBL Bank said. The Bank’s Board has approved to issue of up to 95,90,45,636 equity shares at ₹280 per share, amounting to INR 26,853 crores, to the UAE based investor.

Key Details of the Transaction

• Emirates NBD will invest ₹26,853 crores in RBL Bank.
• Up to 95.9 crore equity shares will be issued at ₹280.00 per share.
• Upon completion, Emirates NBD will acquire a 60% stake in RBL Bank.
• Emirates NBD will become the promoter of RBL Bank, gaining control over its operations.

In addition to the primary investment, the deal includes a scheme of amalgamation that will see Emirates NBD’s India Branch merge with RBL Bank. As part of this amalgamation, RBL Bank will issue an additional 8.7 crore shares to Emirates NBD. This move aims to consolidate Emirates NBD’s presence in the Indian banking sector.

To facilitate the deal, RBL Bank will cap foreign ownership at 24% until the transaction is completed. This measure is designed to ensure compliance with foreign investment regulations and create the necessary headroom for Emirates NBD’s investment.

In another update, Emirates NBD has decided to quit the proposed acquisition of IDBI Bank and is expected to seek a majority stake in RBL Bank, reported The Hindu Businessline. Ealier, the Dubai-based financial institution offered $6bn to $7bn for a 61% stake in IDBI Bank in May this year, after talks with the Department of Investment and Public Asset Management (DIPAM). However, Emirates NBD is shifting its focus to RBL Bank, due to delays in the completion of the IDBI bank deal, said the publication.