IndusInd Bank Promoter Plans Stake Hike; Engages Sovereign, Pension Funds

IndusInd International Holdings Ltd., the promoter entity of IndusInd Bank, is in early talks with global investors, including sovereign wealth funds and pension funds to raise fresh equity capital, Mint reported. The move is aimed at increasing the promoter entity’s stake in the private-sector lender, which is already grappling with accounting and regulatory crises.

The promoter entities—IIHL and IndusInd Ltd.—together held near 16% stake in the company, of which IIHL alone held over 12% stake. Shares of the lender closed 0.5% lower on Monday at Rs 812.70 on the National Stock Exchange. At its Monday close the stock was over 34% higher than the 52-week low and was 48% below the 52-week high level. On Tuesday, the stock was trading 0.7% higher in the pre-open session.

The Reserve Bank of India has given in-principle approval to IIHL in March 2023 to raise its stake to 26%. “Once the final approval comes, the holding company needs to be ready with cash to buy the remaining stake,” the reported quoted one of the executives, as saying. IIHL had already raised $100mn through a rights issue last year.

IIHL is looking to issue new shares and bring in a single global financial investor to support its plan of raising its stake in the lender.

In the recent March quarter financial results, the troubled lender reported a massive loss of Rs 2,329 crore, marking its first profit-deficit quarter in nearly 20 years. Bank's interest income during the quarter fell 13% to Rs 10,634 crore from Rs 12,199 crore in the March quarter of FY24. In March, the lender disclosed discrepancies worth Rs 2,100 crore in its derivatives portfolio as of December 2024, which prompted an internal review and a forensic audit.

Separately, IIHL completed its acquisition of Reliance Capital in March this year, nearly two years after emerging as the successful resolution applicant for the company under the insolvency and bankruptcy process.