Axis Bank raised funds via QIP (Qualified Institutional Placement) last week. The QIP was successful and it saw interest from FIIs (Foreign Institutional Investors) and domestic investors. However, the bank may eventually have more capital in their balance sheet than just the money from QIP.

Axis Bank could get a cumulative capital enhancement of over Rs 16,500 crore. This would mean that based on Q1FY20 risk weighted assets, their Tier I ratio can increase by more than 250 bps. They launched a QIP for Rs 12,500 crore against which they received bids worth about Rs 13,000-13,500 crore. The QIP price is likely to be at Rs 629 per share, according to sources.

The bank will also get funds from existing promoter shareholders like LIC, etc. of about Rs 2,500 crore. This infusion is being done by promoter shareholders in order to retain their shareholding at current levels. The bank has also got RBI’s nod to reduce risk weight assets on their book which will result in freeing capital worth Rs 1,500-1,700 crore.

Takers for the QIP

There are quite a few. Long only FIIs may get 48 percent of the QIP. Domestic institutional investors may get 33 percent; in which 26 percent is done by domestic mutual funds & 7 percent by domestic insurance companies. Hedge funds may get 16 percent while others should get the remaining 3 percent.

CNBC-TV18 has also learnt that that Dodge & Cox, a California based fund, is likely to have put in a bid of about Rs 1,300 crore.

It’s noteworthy that the bank will get funds from investors who have participated in the QIP on September 25 and it will allocate shares to these investors on September 27.

Axis Bank management did not comment on our capital enhancement details query.

First Published:Sept 24, 2019 3:57 PM IST