Axis Bank seeks shareholders nod to raise Rs 50,000 crore via debt, equity

New Delhi: Private sector lender Axis Bank plans to raise up to Rs 50,000 crore through debt securities and equity share to maintain adequate level of capital for risk weighted assets and fund business growth.

Under the proposal, Axis Bank will raise Rs 35,000 crore through debt securities in Indian or foreign currency, while Rs 15,000 crore to be raised through issuance of equity shares or securities convertible into equity shares, Axis Bank said in a regulatory filing.

The board of bank has already approved the capital mop-up.

The private sector lender said its annual general meeting (AGM) is to be held on July 31, 2020 and it will seek shareholders' approval for the proposals. The AGM will take place through video conferencing.

Keeping in view the projections of the bank in domestic and overseas operations, it may need to raise additional funds in one or more tranches in Indian as well as overseas market in the form of capital to maintain desired capital to risk weighted assets ratio (CRAR) by issue of debt securities denominated in Indian rupees or any other permitted foreign currency, Axis Bank said.

The debt securities, it said, can be through instruments like long term bonds, green bonds, masala bonds, optionally/compulsorily convertible debentures, and non-convertible debentures on a private placement basis, during the period of one year, from the date of passing of this special resolution.

Axis Bank said the board of directors will seek to obtain permission of shareholders for borrowing/raising funds of "an amount not exceeding Rs 35,000 crore, on a private placement basis".

The said limit of Rs 35,000 crores will be within the overall borrowing limit of Rs 2,00,000 crore as approved by the members in June 2018, it said.

On the equity fund raise, it said the bank has grown consistently over the last several years. Since the last equity capital raised by the bank in 2019, the business of the lender has continued to grow across various business lines.

Regulatory requirements for equity capital continue to increase with the adoption of Basel III requirements by the Reserve Bank of India.

As on March 31, 2020, the bank's common equity Tier I (CET 1) ratio was 13.34 per cent.

Regulatory requirements for equity capital continue to increase with the adoption of Basel III requirements by the Reserve Bank of India.

As per this roadmap, the minimum CET 1 ratio has increase to 8 per cent, with effect from September 30, 2020.

Axis Bank said COVID-19 pandemic has significantly impacted many businesses across the country and a stronger capital base will further strengthen its ability to deal with unanticipated contingencies or market disruptions which may arise due to the pandemic.

"Lending opportunities for the well capitalised banks continue to be strong, and the relative competitive position of the Bank in the sector continues to strengthen as well.

"As macro-economic growth improves from current levels, to support the growth aspirations of the Bank, and to meet increasing regulatory requirements, it is important that the bank remains well-capitalised, with a strong CET 1 capital base," it said.

In order to further strengthen CET 1 ratio and be well placed to deal with the COVID-impact on business from a position of strength, while ensuring that there is capital to support growth as the economy revives, the bank proposes to raise equity capital of not exceeding Rs 15,000 crore, it added.

It said the board in the AGM will seek permission of members to create, offer, issue and allot with or without green shoe option, such number of equity shares, and/or equity shares through depository receipts, and/or securities convertible into equity shares or any other instrument or securities representing equity shares by way of a private placement, including qualified institutions placement (QIP).

Axis Bank stock closed 1.17 per cent higher at Rs 428.50 apiece on BSE.