IDFC FIRST Bank Board Approves Rs 7,500 Cr Fundraising from Warburg and ADIA
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Synopsis
On April 17, IDFC FIRST Bank's board approved a significant fundraising initiative, targeting Rs 7,500 crore from Warburg Pincus and the Abu Dhabi Investment Authority, aimed at enhancing profitability and loan book growth.
Key Takeaways
- IDFC FIRST Bank approved Rs 7,500 crore fundraising.
- Funding sources include Warburg Pincus and ADIA.
- Capital adequacy ratio projected to rise from 16.1% to 18.9%.
- Bank aims for 20% growth in its loan book.
- Transformation from infrastructure DFI to universal bank.
Mumbai, April 17 (NationPress) The board of IDFC FIRST Bank convened on Thursday to sanction the raising of up to Rs 7,500 crore from Warburg Pincus and the Abu Dhabi Investment Authority.
The board has endorsed a preferential issue of equity capital (CCPS) worth roughly Rs 4,876 crore to Currant Sea Investments, an affiliate of the global growth investor Warburg Pincus, and about Rs 2,624 crore to Platinum Invictus Limited, a fully-owned subsidiary of the Abu Dhabi Investment Authority (ADIA) operated by its Private Equities Department.
The proposed capital raises are contingent upon shareholder and regulatory approvals. The bank's motivation for this fundraising initiative is to enhance its optimal profitability and target a growth rate of 20 percent in its overall loan book over the next few years, as outlined in an investor presentation.
Over the previous six years, IDFC FIRST Bank has successfully transformed from its legacy as an infrastructure-focused DFI into a modern, technology-oriented universal bank.
During this period, deposits surged six times, loans and advances doubled, and the CASA ratio rose notably from 8.7 percent to 47.7 percent. Profit After Tax (PAT) improved from a loss of Rs 1,944 crore in FY19 to a profit of Rs 2,957 crore in FY24.
“Nonetheless, profitability experienced a dip in 9M FY25 due to industry-wide challenges in microfinance, which the bank has adeptly managed. This fundraising will boost the overall capital adequacy ratio from 16.1 percent to 18.9 percent,” the bank stated in a regulatory filing.
“The bank has firmly transitioned into profitability and is now at a critical juncture, where we anticipate our income growth will consistently outpace OPEX growth, resulting in improved operating leverage. We expect many businesses currently in the investment phase to achieve profitability with scale,” remarked V Vaidyanathan, Managing Director and CEO of IDFC FIRST Bank.
“We are thrilled to have Warburg Pincus back and to welcome a wholly owned subsidiary of ADIA as our shareholder. We extend our gratitude to both for their confidence in us and our future growth strategies, especially during these turbulent global conditions,” he added.
