Dhanlaxmi Bank plans to raise Rs 700 crore in next six month

Dhanlaxmi Bank Ltd. | Bank - Private | BFSI | BSE: 532180 | NSE: DHANBANK

30 May 2011 Evaluate

Dhanlaxmi Bank, the Kerala-based private sector bank is planning to raise another Rs 700 crore in next six months after having raised Rs 290 crore of Tier-I capital through a preferential allotment. However, the bank did not specify the route it will be adopting for raising the fresh capital. The bank has received an enabling resolution from its board for raising Rs 1,000 crore.

The capital raised by the bank will be deployed for lending activities as it needs to keep on augmenting its capital base on a regular basis because of its high credit growth. The bank achieved a credit growth of over 75 percent last fiscal and this year also it expects it to be same for which it will require more capital. The bank's total capital adequacy stands at 11.3 percent, which will go up to 15 percent once the newly raised capital of Rs 290 crore starts reflecting in company books.

Last week, the bank announced that it will be raising Rs 290.53 crore through a preferential issue of equity shares to a group of four private equity funds. The investment by the funds -- WCP Mauritius Holdings (Wolfensohn Capital Partners), Customers Bancorp Inc, MKCP Mauritius Master Holdings II and Multiples Private Equity -- had a lock-in period of one year. The fresh issue will result in the holding of each of the 50,000-odd existing shareholders getting diluted by 20 percent. The allotment had happened at an over 15 percent premium over the scrip's trading price on the Bombay Stock Exchange.