Kolhapur-based Ratnakar Bank has raised Rs 720 crore by selling shares to institutional investors at Rs 67 per share. With this issue the bank's networth has crossed Rs 1,000 crore.
Speaking to TOI, Vishwavir Ahuja, MD & CEO, Ratnakar Bank, said that this was among the initial step towards putting the building blocks in place for expansion of the bank. Given that the asset base of the bank is a little over Rs 2,000 crore, the new capital infusion will provide the bank with capital to grow its business several fold.
The equity investors in the bank include Beacon India Private Equity Fund, Cartica Capital, Faering Capital, Gaja Capital Partners, HDFC, Norwest Venture Partners, and Samara Capital, among others. Besides raising the capital, the bank under its new leadership has brought in a whole new team. The senior executives, who have come on board, include Rajeev Ahuja, former head of fixed income capital market and sales at Citibank, Nitin Chopra, former CEO of Bharti Axa Life Insurance, Sunil Gulati, former group president, corporate & institutional banking, Yes Bank, Suhas Sahakari, former head of SME at Axis Bank, Shanta Vallury, former head, liabilities distribution, ICICI Bank, and Naresh Karia, former country controller, Citibank. "We will begin expanding our branches only after we have put in place the new core banking solution platform," said Ahuja.
He said the process was expected to take a year. The bank whose head office is at Kolhapur has opened a large main office in Mumbai. The Ratnakar Bank is the second example of an old bank repositioning itself as a new generation bank following the entry of new management and investors. With bank licenses being stringently rationed by the Reserve Bank of India, investors are willing to pay a premium for old banks if they see a promise of transformation into a growth story. Earlier, Thrissur-based Dhanlaxmi Bank transformed itself following a change in management with the help of equity investment from private investors.
The 67-year Ratnakar Bank has been widely held old generation private bank which restricted its activities largely in Maharashtra. The Centrum group had picked up a large chunk of shares in the widely held bank and had emerged the single largest shareholder. However, the bank continued to be under pressure to raise capital given Reserve Bank of India's directive that all private banks should have a minimum net worth of Rs 300 crore. Ahuja who joined the bank last year led a team of professional and investors into the bank.
