IDFC First Bank returned to the headlines last week with a fresh ₹75 billion capital raise from Warburg Pincus and the Abu Dhabi Investment Authority. The deal, structured as 8% compulsorily convertible preference shares, which is not usual in the Indian banking industry, with a fixed conversion price of ₹60 and a maximum conversion period of 18 months, has been widely read as a vote of confidence in the bank and the broader Indian financial sector. But is there more to this than meets the eye?Warburg Pincus had fully exited the bank last year. Its re-entry may indicate renewed faith in the institution. More likely, it reflects opportunistic capital deployment in a market that has seen foreign portfolio investors bring in nearly ₹150 billion in just three trading sessions of a truncated week.
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