Axis Bank climbs 3% as QIP kicks off; floor price set at Rs 442.19

NEW DELHI: Shares of Axis Bank climbed 3 per cent in Wednesday's trade after the private lender launched its Rs 10,000 crore qualified institutional placement (QIP) with a floor price of Rs 442.19 per share.

The floor price was at a 3 per cent premium to Tuesday's closing price of Rs 428.90 on BSE. The bank, however, said its committee of whole-time directors at its absolute discretion may offer a discount of not more than 5 per cent to the said floor price.

Following the development, the stock rose 2.74 per cent to hit a high of Rs 440.65 on BSE.

In a filing to BSE, the company said the committee would meet on Monday, August 10, to consider and approve, among other things, the issue price for the equity shares. The lender is looking to raise Rs 8,000 crore as the base deal size, with an option to increase the total funds raised by another Rs 2,000 crore, ET reported.

Last month, the bank had taken an enabling resolution to raise up to Rs 15,000 crore via the equity route. ET had reported that the bank was in talks with Bain Capital for a preferential allotment and other investors, such as Carlyle and Fidelity.

The bank had last raised Rs 12,500 crore through a QIP to fund business growth in September 2019. Its total capital adequacy ratio stood at 17.29 per cent at the end of June. The capital raise could bump up the bank’s tier 1 capital by nearly 150 basis points.

Most marquee Indian banks have announced plans to raise capital to build a Covid-19 war chest and prepare for the onslaught of non-performing loans that could rise to as much as 11.5 per cent of the total advances at the end of this year as per rating agency Crisil. Bad loans were at 8.3 per cent at the end of the fiscal year gone by.