Axis Bank may raise funds via QIP (qualified institutional placement) in the next few days. The bank is looking to raise between $ 1.5-2 billion via equity issuance.

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If you take last two week’s average price, the equity dilution can be between 4.6-8.6 percent, while the book value can increase between 2-7 percent and the Tier I capitalization of the bank can strengthen by 1.2 percent-2.3 percent. Foreign investors as well as domestic investors like mutual funds, etc. have shown inclination to participate in the issue. Existing promoters like LIC & GIC could also participate in order to maintain their stake.

The fund usage will be for growth as well as strengthening of the balance sheet.

Axis Bank has been talking to many investors to assess interest of investors in the bank. There have been few lenders like HDFC Bank & Bajaj Finance who have given a cautious outlook on certain products in the retail segment. Therefore, this fund raising, will help Axis Bank in mitigating any unforeseen challenges in the retail sector. The stock price is down 22 percent from its 52 week high.

What the fund raising can mean?

Dilution can be between 4.6-8.6 percent. Book value can rise by 2-7.3 percent and Tier I ratio can increase by 1.2 – 2.3 percent. Refer the table below for details: