IndusInd Bank and its promoter the Hinduja Group have initiated talks with sovereign wealth funds and pension funds, including Canada’s CPPIB and Singapore’s GIC Pte Ltd, to raise as much as $500 million. The purpose is at bolstering investor confidence amid the deterioration of the private lender’s balance sheet and flight of deposits after the Yes Bank Ltd fiasco.
‘IndusInd Bank has been one of the most impacted banks in the COVID-19 market rout. With promoter shareholding almost close to the maximum cap defined by the Reserve Bank of India, they have to bring in external investors to pump in the capital. The group is in talks with deep-pocketed investors who can help bring in capital and also assuage market concerns,’ said one of the people cited above, requesting anonymity as the talks are private.
The stake of the promoter of IndusInd Bank stands at 14.68 per cent as against the maximum regulatory limit of 15 per cent. The promoters have shown additional interest in bringing more capital into the bank, but this effort will require the approval of the central bank.  Many of the investors that have held talks with the bank include Canada’s largest pension fund manager Canada Pension Plan Investment Board (CPPIB) and Singapore’s state investor GIC, the person said, adding that the talks are in early stages. Investment bank Morgan Stanley has been hired to help with the fundraising efforts, the person said. IndusInd Bank and CPPIB declined to comment. Emails sent to GIC, Morgan Stanley and the Hinduja Group did not elicit a response.
Read EquityPandit’s Nifty Bank Outlook for the Week