Mumbai: IndusInd Bank’s promoter entity, IndusInd International Holdings Ltd (IIHL), is in preliminary discussions with long-term investors, including sovereign wealth funds and pension funds, to raise fresh capital by issuing new shares, according to two senior executives familiar with the matter.
The move aims to increase the Hinduja Group entity’s stake in the private-sector bank, the two executives said. Notably, IndusInd Bank is currently grappling with accounting and regulatory crises, as well as falling share prices.
“IIHL has diversified holdings with nearly 583 shareholders,” the first person cited above said on condition of anonymity. “None of the (current) shareholders are selling. Instead, IIHL is looking to bring in a single global financial investor.” Currently, promoter entities IIHL and IndusInd Ltd together hold 15% stake in IndusInd Bank, with IIHL alone holding 12.06% stake as of March 2025.
IIHL has already received in-principle approval from the Reserve Bank of India (RBI) in March 2023 to increase its stake in the bank to 26%, according to a media statement from the company at the time.
“Once the final approval comes, the holdco (holding company) needs to be ready with cash to buy the remaining stake,” said a third executive who also spoke anonymously, adding that the company had raised around $100 million through a rights issue last year in anticipation of increasing its stake in IndusInd Bank from 15% to 20%.
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The executives did not disclose the amount of money IIHL plans to raise in the current round. However, they confirmed that apart from using part of it to increase stake in the bank, IIHL will also repay some debt incurred during its acquisition of Reliance Capital, which concluded earlier this year.
Barclays is engaging with potential investors on behalf of the Hindujas to raise the capital, the two executives cited earlier said.
An email sent to IIHL remained unanswered till press time, and Barclays declined to comment.
The background
IIHL’s decision to increase its stake comes as IndusInd Bank navigates a challenging period marked by an accounting crisis and a significant decline in its share price. In March, the bank disclosed discrepancies worth ₹2,100 crore in its derivatives portfolio as of December 2024, prompting an internal review and a forensic audit. This was followed by the resignations of its chief executive officer (CEO) Sumanth Kathpali and deputy CEO Arun Khurana.
IndusInd Bank’s shares have fallen by 9% since 10 March when it disclosed the discrepancies.
IIHL chairman Ashok Hinduja had indicated at the time that increasing the stake was under consideration following the bank’s stock performance. “This is an opportune time as a promoter to increase stake,” Hinduja stated on the sidelines of a press conference after completing the acquisition of Reliance Capital in March.
Established in 1993 for the purpose of acquiring a banking licence, IIHL is a closely held company with nearly 583 shareholders, primarily non-resident Indians (NRIs) who came together to set it up. The entity generates its income primarily from dividends received from IndusInd Bank.
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Over the past six years, IIHL has raised capital through several rights issues. Its paid-up capital stood at $42 billion and net-worth at $2.5 billion, according to the third executive cited earlier. Following the fall in IndusInd Bank’s share price, IIHL’s book value has been reduced to around $35 billion from an earlier $90 billion.
Separately, IIHL completed its acquisition of Reliance Capital in March this year, nearly two years after emerging as the successful resolution applicant for the non-banking finance company under the insolvency and bankruptcy process.
The total deal size amounted to ₹9,650 crore, of which the Hindujas raised ₹7,300 crore via debt and the remainder through equity, according to the company. Barclays Capital and 360One assisted the promoter group in raising funds through high-yielding rupee bonds, according to a person familiar with the development.
On Monday, IndusInd Bank’s share price fell 0.56% to settle at ₹812.55 on the BSE.
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