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Bloomberg
The billionaire Hinduja family paid a premium to boost its stake in IndusInd Bank Ltd., a sign of confidence in the Indian private-sector lender as concerns over its asset quality ease.
IndusInd International Holdings Ltd., which represents the bank’s founding Hinduja clan, completed a rights issue to fund the conversion of warrants to shares in the Mumbai-based bank,
it said. The warrants will be redeemed at 1,709 rupees a share, a 61% premium over Tuesday’s close.
The holding company also plans to sell some other investments to finance the 20.2 billion rupee ($277 million) warrant redemption, it said.
Billionaire Srichand P Hinduja founded IndusInd Bank in 1994. The family’s holding in the lender shrank to 13% following its merger with the nation’s largest microlender Bharat Financial in July 2019. This week’s conversion comes after the family paid 6.7 billion rupees to redeem 25% of warrants that year.
“The conversion of warrants to equity will strengthen investor confidence in the bank as it shows the founders’ commitment in the long-term growth of the bank,†said Kranthi Bathini, director of WealthMills Securities Ltd.
Shares of IndusInd Bank fall 1.6%. The stock has more than tripled from a low in March 2020, when government-backed rescue of peer Yes Bank soured sentiment for private lenders. The rebound has come as IndusInd’s deposit base and asset quality improves.
The decision “to redeem the warrants at a premium over the prevailing share price stands testimony to the strong trust and confidence in IndusInd Bank’s management and its strategic direction,†the company said in the statement.