Aditya Birla Private Equity, Norwest Venture Partners and Faering Capital buying stake worth Rs 300 crore in Ratnakar Bank

(Faering Capital is promoted by Aditya Parekh. It is among the private equity investors buying stake worth Rs 300 crore in Ratnakar Bank, an investment that will help it prepare for an initial public offering next year.)

 Aditya Birla Private Equity, Norwest Venture Partners and Faering Capital are among private equity investors buying stake worth Rs 300 crore in Ratnakar Bank, an investment that will help it prepare for an initial public offering next year.

Private equity company Norwest Ventures is promoted byPromod Haque, a famous Silicon Valley-based investor while Faering Capital is promoted by Aditya Parekh, the son of HDFC Chairman Deepak Parekh. For both, it is the second round of investment in the bank.

Ratnakar will use the funds to grow loans in a country where the demand for credit still remains strong at about 17 per cent, though far lower than the 30 per cent or above growth before the 2008 crisis, said two people familiar with the plans. Gaja Capital, GPE (India), Argonaut Ventures, UTI invest Advisory are the other investors.

The Maharashtra-concentrated bank founded before independence is raising funds for the second time in three years after Vishwavir Ahuja, a former Bank of America executive, took up the top job at the bank in 2010. He hired executives from Citigroup and Bank of America to transform it from a staid rural lender to a bank for the rising modern middle class.

Ahuja could not be reached for comments.

"The bank has raised the second round of funds from some of its existing investors as well as new investors," said a banker familiar with the transaction.

Although Ratnakar is a traditional bank, its valuation could rise as its branch network and trained staff would be a target for new banks that are likely to be floated under the Reserve Bank of India's new bank licensing norms.

In 2010, the bank had raised 720 crore by selling shares to investors such as Faering Capital, Gaja CapitalPartners and Norwest Venture Partners.

The bank's net profit rose to 65.33 crore in the financial year ended March 31, 2012 as against 12.53 crore in the same period last year. It has 108 branches across the country.

Source : Sneha Shah & Sabarinath M, ET Bureau