Block deal: Axis Bank shares in focus as Bain Capital entities may sell $444 million worth stocks

Shares of Axis Bank Ltd will be in focus on Wednesday morning as private equity firm Bain Capital, through three of its entities, is likely to offload 1.1 per cent stake in th private lender for $444 million, comprising 3.34 crore shares via block deal, media reports suggested quoting sources. The floor price is set at Rs 1,109, which was at 1.95 per cent discount to the Tuesday's closing price of Rs 1,131 apiece. As per a CNBC TV18 report, there would be three sellers entities namely BC Asia Investments VII,  BC Asia Investments III and Integral Investment South Asia IV.

NSE data showed BC Asia Investments VII (98,11,765 shares), BC Asia Investments III (70,58,824 shares) and Integral Investment South Asia IV (56,29,412 shares) had sold axisbank-share-price-363692">Axis Bank shares on June 15 this year a Rs 968 per share. The floor price for the forthcoming block deal would be at 16.83 per cent premium to this price. 

BC Asia Investments VII had also sold 1,66,80,000 Axis Bank shares at Rs 891.38 apiece on November 1, 2022.

Last month, Axis Bank hosted Analyst Day meet, wherein the private bank's management as represented by Managing Director Amitabh Chaudhary, suggested that the bank was upbeat on maintaining growth and net interest margin (NIM) near the prevailing levels.

Also read: Axis Bank Analyst Day: Key takeaways, share price targets & more

"The management indicated that growth focus will remain on high RAROC segments including Bharat Banking, Small Business Banking (SBB), MSME + mid-corporate and unsecured retail. The recent RBI regulation on unsecured lending is expected to result in upward movement in pricing. Although it will impact Tier1 capital for the bank, the management has no intentions of raising money in the near term and expects that the accreted capital and provision buffers will be sufficient to fund its growth aspirations," said JM Financial.  

"While the focus on high quality deposit franchise has seen green-shoots, sweating of existing infrastructure to close the gap with larger private sector peers will take some time. As the bank continues to invest in branch expansion and key tech initiatives, cost-to-assets ratio will remain elevated in the near term (Q224 at 2.6 per cent), but implementation of digital initiatives like Sparsh (customer centric approach) and Siddhi (empowering employees to serve customers better) will result in higher productivity and operational efficiencies," it added.

Analysts said the Axis Bank management guided FY25 exit cost-to-asset ratio of 2.1 per cent (ex-Citi). The bank suggested that it was focusing on ramping Axis 2.0 – a fully digital bank within the bank with a comprehensive end-to-end digital solutions. Axis Bank, the management said, made heavy tech investments over last few years to become a digital consumer lending powerhouse and that it is going in the right direction.

"Through diverse digital capabilities and strategic partnerships within the ecosystem, Axis Bank is experiencing significant growth and establishing itself as a robust customer acquisition engine. Axis Bank has been reporting strong growth in the retail and mid-corporate segment, which along with MSME would remain the key growth driver. The bank suggested continued investment in the business, given a favourable environment, and thus, enabling 4-6 per cent higher growth than the system over the medium term," Motilal Oswal Securities said in November.

 

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