Emirates NBD to buy $3bn majority stake in India's RBL bank

Emirates NBD will invest $3.05 billion to buy a majority stake in Indian private lender RBL Bank, marking the largest foreign direct investment in India's financial sector.

Dubai's largest bank by assets will acquire a 60 per cent stake in RBL Bank through a preferential issue of shares, Emirates NBD said in a statement on Saturday. As part of the deal, it will also make a mandatory open offer for the purchase of up to 26 per cent stake from the public shareholders of RBL Bank, in line with India's takeover regulations.

The investment underscores "our confidence in India’s vibrant and expanding economy... We envisage to support Indian businesses, trade, projects, and other opportunities throughout the region leveraging our network," Shayne Nelson, group chief executive of Emirates NBD, said.

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The Dubai-based lender's deal is the latest in a string of Middle East investments into India's financial sector. Earlier this month, Abu Dhabi's International Holding Company (IHC) agreed to acquire a 43.5 per cent stake in India’s Sammaan Capital in a $1 billion deal.

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The transactions also highlight the UAE's deepening economic ties with India. The two countries have signed a Comprehensive Economic Partnership Agreement (Cepa) in 2022. Its benefits include enhanced market access, lower or eliminated tariff rules, simpler customs procedures, clear and transparent rules and rule-based competition.

Emirates NBD said its investment reflects its confidence in India's fast-growing financial sector and the country's strategic importance in the India-Middle East-Europe Economic Corridor (IMEC).

"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," the Dubai lender said.

The two banks approved the merging of the India branches of Emirates NBD with and into RBL Bank once the deal is completed, according to the statement.

"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," RBL Bank chairman Chandan Sinha said. "Together, we are poised to strengthen our capabilities, deepen our customer franchise, and build a future-ready institution."

DFM-listed Emirates NBD had assets worth $297 billion as of the end of June. It has operations in countries including Egypt, Saudi Arabia and Turkey, where it acquired DenizBank in 2019. Emirates NBD is 56 per cent owned by the Dubai government via Investment Corporation of Dubai and Dubai Holding Group.

Emirates NBD currently operates in India as a foreign bank under the branch mode. The bank established its first representative office in 2000 in India, and subsequently converted to a branch license in 2017. The bank currently operates with three branches in India’s commercial centres like Mumbai, Gurugram and Chennai.

RBL serves over about 15 million customers through a network of 564 branches and 1347 business correspondent branches (of its 100 per cent subsidiary) and 415 ATMs.

Financial Advisors for Emirates NBD on the deal included Ernst & Young, J.P. Morgan and NeoStrat Advisors. Shardul Amarchand Mangaldas & Co acted as legal adviser for Emirates NBD, while AZB & Partners were the legal adviser for RBL Bank.