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Axis Bank Ltd. On Friday Raised Rs 12,500 Crore Via Its Qualified Institutional Placement, Including A Green-Shoe Option Of Up To Rs 2,500 Crore.

In July, The Bank’s Board Had Approved The Proposal To Raise Up To Rs 18,000 Crore Through An Issue Of Equity Shares, Depository Receipts, Or Convertible Securities And Now Axis Bank Is Seeking To Immediately Raise About Three-Fourths Of That Targeted Amount.

The Mumbai-Based Lender Has Already Sent Feelers To Leading Institutional Investors — Foreign And Domestic — On The Likelihood Of A Qualified Institutional Placement (QIP) As Early As Next Week. The Axis Bank QIP Is Now Closed For Subscription. It Witnessed Strong Demand From Both Domestic And Foreign Investors.

The Lender Has Appointed Axis Capital, Citi, JPMorgan, BNP Paribas, Credit Suisse, UBS And HSBC As Bankers To The QIP.

In A QIP, The Market Sentiment And Issue Pricing Decides The Extent Of Demand For Shares On Offer. An Investment Banker Said That Overseas Funds Have Shown Interest In Axis Bank.

Shares Were Issued At A Base Price Of Rs 661.50 Apiece, With An Option To Avail A Maximum Discount Of Up To 5 Percent. A Board Meeting Would Now Be Held On Sept. 25 To Approve The Allotment Of Shares.

Funds Raised Via Axis Bank QIP Will Increase The Lender’s Tier-I Ratio By 2.2 Percent. Axis Bank’s Tier-I Capital Adequacy Ratio Stood At 12.9 Percent In The First Quarter Of Financial Year 2019-20. Its Total Capital Adequacy Was At 16.06 Percent During The Same Period. This Is Expected That It Will Support The Loan Book Growth For The Bank Along With Its Target To Deliver A 18 Percent Return-On-Equity.

The Base Price For The Axis Bank QIP Is At A Premium To The Book Value Of Rs 272 Per Share.

Tier I Capital Consists Mainly Of Share Capital And Disclosed Reserves. Since This Capital Is Fully Available To Cover The Core Losses, It Is Also Called Core Capital. For This Reason This Is Considered As The Highest Quality Capital.

Tier II Capital Is Also Known As Supplementary Capital. It Consists Of Certain Reserves And Certain Types Of Subordinated Debt. Any Loan Which Are Repayable After Other Debts Have Been Paid, It Is Called Subordinated Debt. In Other Words, First All The Senior Debts Would Be Paid Off In Full From The Assets And Earnings Of The Company. After Paying All The Dues, If Anything Is Left, Then The Subordinated Debt-Holders Will Receive Payment.


The Stock Has Shown A Strong Bullish Move Today.

TECHNICAL VIEW – The News Is Positive For The Bank And It Will Increase Bank’s Capital Adequacy Which Will Lead To An Increase In Funds, The Foreign Investors Are Seeking Interest In The QIP And Technically Also Stock Is Also Looking Positive Now.

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