Emirates NBD to Acquire Majority Stake in RBL

Leading UAE bank Emirates NBD has announced plans to acquire a majority stake in RBL Bank, one of India’s leading listed private sector banks, through a primary infusion of US$3 billion, the largest FDI and equity raise in the Indian banking sector till date.

The proposed investment will be made via a preferential issue of up to 60% and will be subject to regulatory approvals and other customary closing conditions, said the Emirati bank in a statement.

The transaction underscores ENBD’s long-term commitment to the Indian market and is a landmark transaction for the Indian financial services sector, it stated.

According to experts, this was the largest ever foreign direct investment in the Indian financial services sector and also the largest fund raise via preferential issuance by a listed company in the country.

Also it is the first acquisition of majority interest in a profitable Indian bank by a foreign bank, they stated.

Announcing the strategic move, Emirates NBD said this investment reflects ENBD’s confidence in India’s fast-growing financial sector, thus reinforcing the country’s strategic importance within the India-Middle East-Europe Economic Corridor (IMEC) and marking an important chapter in the economic partnership between India and the UAE.

The transaction brings together ENBD’s strong capital base and regional franchise with RBL Bank’s established presence and extensive distribution across India, it stated.

The infusion will significantly strengthen RBL Bank’s balance sheet, enhance its Tier-1 capital ratio, and provide long-term growth capital, further enabling the Bank to deepen its deposit franchise and expand its footprint through calibrated branch network expansion, said the bank in a statement.

As part of this transaction, ENBD will also make a mandatory open offer for the purchase of up to 26% stake from the public shareholders of RBL Bank, in accordance with SEBI’s Takeover Regulations.

The Board of Directors of ENBD and RBL Bank also approved the amalgamation of the India branches of ENBD with and into RBL Bank as required by RBI guidelines.

This amalgamation is expected to be completed after the execution of the preferential issuance into RBL Bank.

Emirates NBD Group CEO Shayne Nelson said: "Our investment in RBL Bank is a testament to our confidence in India’s vibrant and expanding economy. This strategic alignment brings together RBL Bank’s growing domestic franchise with Emirates NBD’s regional reach and financial expertise, creating a unique platform for growth and innovation."

He pointed out that an enhanced presence in India for ENBD, through a well-established business like RBL Bank, would further complement the group’s service to customers operating throughout the region.

"We envisage to support Indian businesses, trade, projects, and other opportunities throughout the region leveraging our network," he noted.

RBL Bank Chairman Chandan Sinha said: "This partnership marks a defining moment in our bank's journey of transformation. The entry of Emirates NBD as our strategic shareholder reflects the global confidence in India's banking sector and RBL Bank’s potential within it."

"Together, we are poised to strengthen our capabilities, deepen our customer franchise, and build a future-ready institution anchored in trust, governance, and growth," stated Sinha.

"RBL Bank will be able to capitalise on ENBD’s strong credit rating and its established relationships with companies, banks, and financial institutions across India. Conversely, ENBD would gain from the enhanced market presence afforded by RBL Bank’s extensive pan-India network and its expanding business franchise," he added.

R Subramaniakumar, Managing Director & CEO of RBL Bank said, "Welcoming ENBD as our new strategic partner is a significant milestone for the Bank. This partnership secures a robust and globally respected anchor shareholder, providing a strong capital base for our future."

"We are excited about the synergies this alliance will create and are confident that our combined strengths will deliver superior value to all the stakeholders of the Bank," he added.

For Emirates NBD, the financial advisors were Ernst & Young LLP (EY) - Investment Banking, JP Morgan and NeoStrat Advisors, while the legal advisors were Shardul Amarchand Mangaldas & Co for ENBD and AZB & Partners for RBL Bank.