Karnataka Bank bolsters financial base with Rs 700cr equity capital issuance

In a significant financial development, Karnataka Bank, a prominent Indian banking institution, has announced its intention to issue equity share capital up to ₹700 crore. This substantial amount will be raised in a phased manner, with ₹100 crore through a Preferential Issue and the remaining ₹600 crore in one or more tranches. This move is a part of the bank’s broader strategy to raise up to ₹1,500 crore, as approved by the Board of Directors on September 22, 2023.

Strategic Capital Raise for Future Growth

The Board of Directors, in their recent meeting, confirmed the plan to raise the balance ₹700 crore. This will comprise a Preferential Issue for an amount of up to ₹100 crore and an additional amount aggregating up to ₹600 crore through private placements, qualified institutions placements, or a combination of these methods. This decision follows the successful raising of ₹800 crore by way of Preferential Issue of Equity Shares on October 26, 2023.

The Board has specifically approved the issuance of up to 37,72,730 equity shares to ICICI Lombard General Insurance Company Limited at a price of ₹265.06 per share. This transaction alone amounts to an aggregate of ₹100 crore and is subject to shareholder and regulatory approvals.

Strategic Expansion: Karnataka Bank Set to Issue Equity Shares Worth ₹700 Crore in Multiple Tranches

Enhancing the Bank’s Financial Foundation

The proposed issue aims to bolster Karnataka Bank’s financial base, providing a solid foundation for its future growth. The funds will be primarily used to meet the bank’s expanding business needs, including long-term capital requirements and general corporate purposes. This move signifies a strategic step towards enhancing the bank’s capacity for innovation and expansion.

Srikrishnan H., MD & CEO of Karnataka Bank, expressed confidence in the proposed capital infusion, highlighting it as a testament to the bank’s growth and stability. He welcomed ICICI Lombard General Insurance Company Limited to their capital table, emphasizing the importance of institutional holdings in the bank’s journey.

Sekhar Rao, Executive Director of Karnataka Bank, echoed this sentiment, stating that the capital raise would accelerate the bank’s growth and innovation trajectory. He underscored the importance of this financial step in supporting the bank’s ambitions to expand its reach, embrace digital transformation, and deliver value to all stakeholders.

NovaaOne Capital, a SEBI-registered Merchant Banker, is acting as the financial advisor for this significant fund raise through preferential issue. With these strategic financial moves, Karnataka Bank is set to navigate the challenges of the dynamic banking sector and emerge as a more robust and innovative player in the market.

Karnataka Bank’s decision to raise equity capital is a forward-thinking move that aligns with the current trends in the banking sector. By strengthening its financial base and focusing on growth and digital transformation, the bank is positioning itself to compete effectively in the increasingly digital and competitive banking landscape. This initiative not only reflects the bank’s commitment to sustainable growth but also its adaptability to changing market conditions.