ChrysCapital II LLC, the leading venture capital firm, will acquire a 13 per cent stake in Development Credit Bank for an investment of Rs 35.8 crore (Rs 358 million), putting the bank's valuation at over Rs 270 crore (Rs 2.7 billion).
As per the proposed deal, ChrysCapital will acquire 6,509,091 shares of Rs 10 each in the bank at Rs 55.
With the additional equity inflow, the bank is expected to get an impetus in its personalised banking services as well as expand its retail banking network.
ChrysCapital's proposal for picking up equity base in the bank is currently awaiting the government approval.
The fund plans to pick up equity in DCB either directly or indirectly through its affiliates and subsidiaries.
This will be second bank in which ChrysCapital will invest.
It already has an investment in Rana Kapoor's Yes Bank -- its holds a 7.5 per cent stake in the bank.
Yes Bank has also given its no-objection certificate to ChrysCapital's investment in DCB.
On September 30, 2003, DCB' total equity capital was Rs 28.15 crore (Rs 281.5 million) with Aga Khan Fund for Economic Development holding 49 per cent of it.
As of March 2003, the bank also had a deposit base of Rs 3,657 crore (Rs 36.57 billion) and the advances were over Rs 2,488 crore (Rs 24.88 billion).
The equity investment by ChrisCapital is also expected to give the bank additional foreign exchange.
Besides, the $126.68 million venture capital fund is also expected to get the bank a network of relationships as well customers.
DCB, which currently has a network of 62 branches across the country also has the permission to start an additional nine more branches.
Since its inception, the bank had developed a strategy aimed at products for specific market segments.