(Reuters) -India’s RBL Bank surged to a five-year high on Monday after Dubai-based Emirates NBD decided to purchase a $3 billion stake in the private lender, the largest cross-border acquisition in the country’s financial sector.
Emirates NBD will buy a 60% stake in RBL Bank via a preferential issue at 280 rupees per share, a 6.5% discount to the stock’s last close, the Indian lender said on Saturday, adding that it will merge with ENBD’s local business.
The stock was up at 319.10 rupees, its highest level since February 2020, as of 09:59 a.m. IST on Monday.
The deal could boost RBL’s net worth to $5.12 billion from $1.82 billion, while opening up the speed highway for organic growth via secured retail and corporate assets, Emkay Global analysts said.
CLSA analysts called the transaction a “landmark deal” for a financial services company in India, adding that benefits from the investment will be noted in the long term.
The stake buy is the beginning of a new chapter for RBL, CITI analysts said.
The substantial influx of “confidence capital” significantly enhances medium-to-long term growth visibility for RBL Bank, they said.
RBL Bank has undergone a leadership reset in recent years after the abrupt exit of its CEO in 2021. The Indian lender has since worked to rebuild investor confidence following concerns over governance and asset quality, particularly in its unsecured lending portfolio.
The deal will give RBL Bank a major capital infusion, strengthening its balance sheet and boosting its capacity to lend and expand.
Since reports of the deal emerged on October 13, stock has climbed 10% and more than doubled so far this year, compared with a 15% climb in the private banks sub-index.
The lender, on Saturday, also reported a 20% drop in its quarterly profit on elevated write-offs in its credit card book.
($1 = 87.8762 Indian rupees)
(Reporting by Kashish Tandon in Bengaluru; Editing by Nivedita Bhattacharjee and Sherry Jacob-Phillips)
