Emirates NBD Acquires Majority Stake in RBL Bank

Emirates NBD

Emirates NBD Acquires Majority Stake in RBL Bank

The boards of directors of Emirates NBD and RBL Bank Limited, in their meetings held on Saturday, approved the final agreements for Emirates NBD to acquire a controlling stake in RBL Bank through an initial capital injection of approximately $3 billion.

The proposed transaction underscores Emirates NBD's long-term commitment to the Indian market and is a first-of-its-kind transaction in the Indian financial services sector, marking:

The largest-ever equity fundraising in the Indian banking sector 

 The largest fundraising through a preferred issue by a listed company in India

The first acquisition of a majority stake in a profitable Indian bank by a foreign bank.

The proposed investment will be made through a preferred issue of up to 60 percent and is subject to regulatory approvals and other customary closing conditions.

As part of this deal, Emirates NBD will also make a mandatory open subscription offer to acquire up to 26 percent of the public shareholders of RBL Bank, in accordance with the Securities and Exchange Board of India's takeover regulations.

The boards of directors of Emirates NBD and RBL Bank have also approved the merger of Emirates NBD's Indian subsidiaries with RBL Bank, in accordance with Reserve Bank of India guidelines. This merger is expected to be completed after the preferred issue of RBL Bank.

This investment reflects Emirates NBD's confidence in India's rapidly growing financial sector, enhancing India'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.

A Landmark Deal

Analysts say the largest overseas deal in India's financial sector, which has lifted shares across the sector, reflects a new direction not only for the bank but also for the country's banking sector more broadly.

CLSA analysts called the deal "historic" for a financial services company in India, noting that the investment benefits will be felt over the long term. Citibank analysts said the deal represents a positive step for the financial sector as a whole and reflects growing foreign interest in Indian banks.

Cross-border deals worth $8 billion were announced in the Indian financial sector between January and September amid easing regulatory restrictions. Reuters reported in June that the Reserve Bank of India was showing greater willingness to allow foreign financial institutions to invest in Indian banks.

Analysts at Emkay Global said the deal, which is still pending regulatory and government approvals, could boost the Indian bank's net worth to $5.12 billion from $1.82 billion, while providing opportunities for organic growth through secured assets for individuals and companies.

RBL shares rose 7 percent to Rs 321.30, their highest level since February 2020, by 11 a.m. Indian time on Monday. The share price has doubled so far this year, compared to a 15 percent rise in the private banks sub-index.