UK-based development finance institution (DFI), CDC Group plc has invested $28 million (Rs 168 crore) in PE-backed regional private lender Ratnakar Bank Ltd (RBL), in its first direct equity investment in an Indian bank under its new investment strategy.
CDC has acquired 4.8 per cent stake, valuing the bank at Rs 3,500 crore ($583 million).
CDC’s investment will provide capital to the bank as it continues to implement its expansion strategy to enlarge presence in states such as Rajasthan, Madhya Pradesh and West Bengal, where the penetration of financial services is low.
Founded in 1943, Ratnakar Bank was traditionally concentrated in Maharashtra, Karnataka and Goa. In 2010, however, a new management team was brought in to pursue an expansion strategy. Today the bank has a business size of over $3.5 billion and offers its services to over 500,000 customers.
CDC’s regional director South Asia, Srini Nagarajan, said: “We view this is as a unique opportunity to invest in an institution which has a real prospect of becoming a platform serving a population that CDC wants to reach and fostering financial inclusion, financing of SMEs and agribusiness.”
Holger Rothenbusch, CDC’s managing director, debt and financial institutions, added: “The bank’s branch network is set to double in five years, creating thousands of jobs. We also anticipate significant job creation in semi-urban and rural areas through the agri-value chain financing and SME lending activities.”
Ratnakar Bank currently has a network of over 160 branches with 350 ATMs across 12 Indian states. It offers specialised services under the five business verticals—corporate & institutional banking, commercial banking, retail banking, agri & development banking and financial markets.
Last year in February, the bank raised $60.64 million from a group of investors, including Aditya Birla PE, IFC, IDFC Alternatives and Ascent Capital, among others, which valued it at around $511 million, according to VCCEdge, the data research platform of VCCircle.
In August 2013, it had acquired the business banking, credit cards and mortgage portfolios of Royal Bank of Scotland (RBS) for an undisclosed amount.
For CDC, one of the largest investors in Indian private equity funds as an LP, this is the second deal in India. It recently invested $27.5 million in Gurgaon-based lifestyle fashion and apparel e-tailer Jabong.com.
CDC's other recent direct deals include micro-finance company Equitas and renewable energy developer Green Infra.
(Edited by Joby Puthuparampil Johnson)