Shares of RBL Bank fell prey to intense profit booking in the session on July 2 amid reports that Dubai-based NBD Bank was looking to acquire a 20% stake in the lender as part of its Asia expansion strategy.
RBL's stock initially reacted positively, rising nearly 4% in early trade. However, the gains were short-lived as profit booking set in, dragging shares into the red
Shares of RBL Bank fell prey to intense profit booking in the session on July 2 amid reports that Dubai-based NBD Bank was looking to acquire a 20% stake in the lender as part of its Asia expansion strategy.
According to a report by the Economic Times, citing unnamed sources, Emirates NBD, owned by the Dubai government, is exploring the acquisition as part of its strategy to expand across Asia. The proposed investment, expected via preferential allotment, would be a primary capital infusion into RBL Bank, the report noted.
The stock initially reacted positively, rising nearly 4% in early trade. However, the gains were short-lived, as profit booking set in, dragging the shares lower. The pullback comes after a strong run in recent months, with the stock having rallied over 65% in the past six months.
Despite RBL Bank’s sharp rally in recent months, analysts note that the stock continues to trade below its book value and remains among the more affordable private sector banking plays in India. The bank currently trades at a price-to-earnings (P/E) ratio of just over 21.
The potential deal between Emirates NBD and RBL Bank is reportedly still under negotiation, and could follow a structure similar to the SMBC–Yes Bank transaction, according to The Economic Times. It further added that Emirates NBD may acquire 15–20% of RBL Bank’s expanded capital base, just below the open offer threshold, subject to regulatory approval.
The proposed investment is estimated at around ₹3,166.24 crore, and may take place at a premium to current market prices, it said.
The Reserve Bank of India (RBI) granted in-principle approval to Emirates NBD to convert its Indian branches in Chennai, Gurugram and Mumbai into a wholly-owned subsidiary back in May. The Dubai-based bank has also recently launched investment banking operations in India as part of its broader regional push.