Media reports that the Middle East bank Emirates NBD is in advanced talks to acquire a majority stake in the company. The report stated that both parties have been in talks for the last few months and Emirates NBD is keen on picking up more than 51% stake in RBL Bank. RBL Bank’s current market capitalisation is at ₹17,800 crore, which implies the deal to be valued at more than ₹9,900 crore.
RBL Bank is targeting its RoA to reach 1% by the end of the CFY compared to 0.56% in Q1CFY. It currently trades at a one-year forward price-to-book multiple of 1 times.
Voting rights for a single investor in a listed private bank cannot exceed 26% as per the current norms. Any change in raising voting rights beyond 26% will require legislative changes, as this ceiling is prescribed in the Banking Regulations Act. Such changes will be time consuming and will require the RBI to first make a formal recommendation.
IDFC First Bank and Yes Bank have seen deals from foreign institutions recently. While a Warburg Pincus unit, Currant Sea Investments BV, acquired a 9.99% stake in IDFC First, Sumitomo Mitsui Banking Corporation received approval from the RBI to increase its stake in Yes Bank to 24%.
