More clarifications required before RBL Bank launches IPO

RBL BankCapital market regulator the Securities and Exchange Board of India (SEBI) has asked lead managers of the initial public offering (IPO) of Mumbai-based RBL Bank (formerly known as The Ratnakar Bank Ltd) to file more clarifications. The company filed its draft red herring prospectus (DRHP) with SEBI for the INR1,100 IPO in June. The initial public offer (IPO) will be managed by Kotak Mahindra Capital, Axis Capital, Citigroup, Morgan Stanley, HDFC Bank, ICICI Securities, IDFC Securities, IIFL Holdings and SBI Capital Markets.

Also Read: RBL Bank files prospectus for INR1,100 crore IPO

In the latest update on its website, the regulator said it has asked lead manager of RBL Bank IPO to furnish more details. The regulator did not mention what additional details it is looking for. SEBI will issue next update in this matter on Monday, 10 August.

RBL Bank is one of the two banks in the IPO pipeline, the other being Catholic Syrian Bank which received SEBI approval last month. These IPOs will mark first public sale of shares in several years. The IPO is crucial for Beacon India Private Equity Fund which plans to sell its entire holding of 95.05 lakh shares in the bank while GPE India also aims to reduce its shareholding.

However, RBL Bank’s bumpy ride is not really a surprise as we reported earlier that certain share issuances, made in the past, could delay the IPO.

Read Also: RBL Bank IPO delayed after Thyrocare-like issuances  

Our Bank has, in certain instances in the past, made allotments of equity shares to more than 49 persons that were not in compliance with the then-applicable laws relating to a public offering of securities, which may subject our Bank to, among other things, sanctions, adjudicatory penalties, remedial directions and other adverse orders, from, amongst others, the RoC and SEBI.

– RBL Bank in its prospectus filed with SEBI

It was during the tenure of previous management when the bank issued shares to several people in order to meet Reserve Bank of India (RBI) requirements of expanding share capital. However, it violated the rules laid out by SEBI and the Companies Act (1956) on public offerings. According to the Companies Act (1956), offer made to more than 49 people is deemed a public issue and thus, requires the nod of market regulator. Although this limit has been increased to 200 people in the new Act of 2013, old laws are applicable on back-dated transactions.

Krishna Bagra

Coming from a family of investors and financial analysts, Krishna learnt wading through regulatory filings pretty early in her career. At IPO Central, Krishna plays twin roles of contributor and head of research desk. She can also be reached at +krishnabagra .

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