RBL Bank IPO oversubscribed by 3.08 times

Kolhapur-based RBL Bank, earlier known as Ratnakar Bank had been operating as a local lender for seven decades

Published: Aug 23, 2016

The financial markets generate a lot of number on a per second basis. There are people who have made it a profession to convert this information into trends, buy-sell signals, charts and pivot tables. Over the last 18 years of financial journalism, I have realised that every number has a story to tell. And these numbers as a trend normally never lie. I am forever looking for these trends.

RBL Bank IPO oversubscribed by 3.08 times
Image: Prasad Gori
Vishwavir Ahuja, MD and CEO, RBL Bank

The initial public offer of RBL Bank has been overall oversubscribed by 3.08 times, on the second day of the opening of the issue. RBL Bank which is headquartered at Kolhapur is the latest entrant to offer its shares to the public. The last bank to go for an IPO was Yes Bank in the year 2005.

Qualified Institutional Buyers subscribed 4.28 times to the number of shares offered which worked out to 10,864,515 shares. Retail investors subscribed 3.26 times the number of shares offered to them. The overall total number of shares offered were 370,901,919 shares which were oversubscribed by 3.08 times.

The public offer is made of equity shares aggregating to Rs 832.5 crore and offer for sale up to 16,909,628 equity shares. The price band of the IPO is fixed at Rs 224-225 per share. Last year the bank made a pre-IPO placement of 2.5 crore shares at Rs 195 per share to CDC Group, DVI Fund, Rimco and Asian Development Bank.

Kolhapur-based RBL Bank, earlier known as Ratnakar Bank had been operating as a local lender for seven decades. With a solid standing in the community, it rarely found the need to step outside its comfort zone. Vishwavir Ahuja, Managing Director and CEO of the bank and his team entered the bank with the goal of putting it on a firm growth path in the year 2010. His aim was to build a professional organisation with high standards of risk management and corporate governance. Three years after the transformation process started, the growth is self-evident. The bank’s deposits are up to Rs 8,340 crore in 2012-13 from Rs 1,585 crore in 2009-10. In the same period, net profit has more than quadrupled from Rs 19 crore to Rs 92 crore.

During the fiscal years ended March 31 2015 and 2016, the bank expanded its business and infrastructure, with deposits increasing by 42 percent from Rs 170,99.25 crore as of March 31, 2015 to Rs 243,48.6 crore as of March 31, 2016 and net advances moved by 47 percent from Rs 14,449.8 crore in March 2015 to Rs 21,229 crore as of March 31, 2016. In terms of growth in deposits, RBL is one of the fastest growing bank in the industry but with a lower base.

The price to book value of the issue works out to 2.44 times the issue price for RBL. The same number for Yes Bank works out to 4 and HDFC Bank has the same number at 4.28 times. The issue closes on August 23, 2016.

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