Current ROE of bank is around 10% and loan book is growing at around 25 %. To maintain the capital adequate ratio bank has to raise tier 1 capital at 15 % . If 15 % is raised at 1.5 times premium to book value, dilution of the equity will be 10%. This is obvious requirement. ROE of the bank will be progressively increase over time. In future tier 1 capital raise requirement will be less. This capital will be raised at higher premium and dilution will be less. So severe dilution pain is short term ( 1 to 2 years) phenomenon.
Disclosure: invested and biased.
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