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Brazilian midsized bank Banco Indusval's capital adequacy ratio is set to rise to 27% after its upcoming capital increase, local news service Agência Estado reported.
The bank had a capital adequacy ratio of 17.6% at the end of last year, above the Brazilian central bank BCB's minimum requirement of 11%, but a far cry from the 24% it had before the crisis in 2008.
The capital increase will inject 200mn reais (US$121mn) in fresh funds into Indusval from Warburg Pincus-controlled private equity fund WP X, local investors and JP Morgan.
Despite the strong capital position that Indusval will have after the increase, the bank will be conservative in its lending and avoid a high leverage ratio, said Jair Ribeiro, one of the local investors taking part in the deal. Ribeiro will be the bank's co-chairman.
The new partners will become minority shareholders through the increase and issue of convertible bonds. WP X is likely to hold 22.7% of Indusval's equity and will get a seat on the board, while JP Morgan will have a 2.5% stake through purchasing a portion of the bonds to be issued.
The São Paulo-based bank focuses on large and midsized enterprises. It closed last year with 3.3bn reais in assets and 1.9bn reais in loans.