Tag: stake

Sumitomo Mitsui Financial acquires 74.9% stake in Fullerton India

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Sumitomo Mitsui Financial Group, Inc (SMFG) has completed the purchase of 74.9 per cent stake in Fullerton India Credit Company Limited (Fullerton India) from Fullerton Financial Holdings Pte Ltd (FFH).

Post the purchase, Fullerton India has become a consolidated subsidiary of SMFG, which will eventually purchase 100 per cent of Fullerton India.

Pandemic recovery fuels deal craze as third-quarter M&A breaks all records

The transaction marks the largest merger and acquisition of a private company in Indian financial services in the last two years and the largest ever inbound control acquisition by a Japanese enterprise entering the Indian market. The acquisition gives SMFG a pan-India presence across 25 states, 600 towns and 58,000-plus villages through 698 branches.

Fullerton India’s management team will continue to operate under the leadership of Shantanu Mitra, Managing Director and CEO.

Keep an eye on mergers

“We are delighted to welcome Fullerton India as a member of SMFG and our business partner in India. The foundation of a country’s development is not just the growth of its corporates but also that of its citizens — Fullerton India will play an important role to promote inclusive growth in line with our long-term strategy for India,” said Jun Ohta, President and Group CEO of SMFG.

Mitra said : “With the rapid deployment of vaccines and steady decline in Covid infection rates, we are witnessing a strong revival of economic activity in India. There is a steady pick-up in credit demand and healthy loan growth. In addition, portfolio quality is also demonstrating encouraging signs of improvement”.

As part of the transaction, Fullerton India’s board will be reconstituted to include Nobuyuki Kawabata, Rajeev Veeravalli Kannan, Hong Ping Yeo, Anindo Mukherjee, Shantanu Mitra, Shirish Moreshwar Apte, Milan Robert Shuster and Sudha Pillai.

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RBI gives approval to LIC to hike stake in Kotak Bank to 9.99%

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The Reserve Bank of India has given its approval to Life Insurance Corporation of India to raise its stake in Kotak Mahindra Bank to 9.99 per cent.

“Kotak Mahindra Bank has received an intimation from LIC stating that the RBI had granted its approval to LIC for increasing its holding in the Bank up to 9.99 per cent of the paid-up equity share capital of Bank, subject to compliance with the provisions of the Master Direction on ‘prior approval for acquisition of shares or voting rights in private sector banks’ dated November 19, 2015, and Master Direction on ‘ownership in private sector banks’ dated May 12, 2016, provisions of the applicable regulations issued by the Securities and Exchange Board of India, provisions of the Foreign Exchange Management Act, 1999 and any other guidelines/regulations and statutes, as applicable,”the private sector lender said in a stock exchange filing on Monday.

The approval is valid for a period of one year, it further said.

LIC currently holds 4.96 per cent stake in the bank as of September 30.

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Poonawalla Fincorp board okays Magma HDI stake divestment

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The board of directors of Poonawalla Fincorp Ltd (PFL) has approved divestment of the company’s direct and indirect shareholding in Magma HDI General Insurance in order to comply with requirements of the Reserve Bank of India and IRDAI.

Sanoti Properties, held by Adar Poonawalla and Serum Institute of India, has agreed to acquire the direct and indirect stake of the company in Magma HDI.

“This structure is in line with other financial services groups with NBFC and general insurance operations and will allow a framework for continued business relationship between PFL and Magma HDI,” PFL said in a statement on Tuesday.

Also see: Poonawalla Fincorp: Consolidated PBT up 151% YoY

PFL will also divest its 48.89 per cent shareholding in Jaguar Advisory which, consequent to the above divestment in MHDI shares, will own only cash and cash equivalent, to Celica Developers, the joint venture partner in Jaguar Advisory.

Regulatory compliance

IRDAI’s Registration of Insurance Companies Regulations stipulates that a promoter of an insurance company cannot be a subsidiary of another company. Post the acquisition of PFL by Rising Sun Holdings in May 2021, PFL has become a subsidiary of RSH. As a result, IRDAI sought compliance from Magma HDI regarding its shareholding structure.

PFL is a joint venture partner in Magma HDI with Celica Developers, Jaguar Advisory and HDI Global SE.

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CCI nod for HDFC Bank’s stake buy in HDFC ERGO

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The Competition Commission of India (CCI) has approved the acquisition of 4.99 per cent shareholding in HDFC ERGO General Insurance Company (HDFC ERGO) by HDFC Bank.

It maybe recalled that HDFC Bank had in June said that its Board had given approval to buy more than 3.55 crore shares in group firm HDFC ERGO General Insurance Company for over ₹1,906 crore from the parent company Housing Development Finance Corporation (HDFC).

“Commission approves acquisition of 4.99 per cent of the outstanding equity share capital of HDFC ERGO General Insurance Company by HDFC Bank,” said a tweet by the CCI.

Meanwhile, an official release said that the Acquirer is a public listed banking company registered with the Reserve Bank of India, which provides a wide range of banking services covering commercial and investment banking on the wholesale side and transactional/branch banking on the retail side.

As a part of the retail banking segment, the acquirer also engages in the distribution of life and general/non-life insurance products.

The Target is a joint venture between HDFC and ERGO International AG and is engaged in the business of general/non-life insurance in India and offers a complete range of general/non-life insurance products, the release added.

Parexel International

Meanwhile, the CCI has also approved the acquisition of Parexel International Corporation by Phoenix Parentco, Inc.

The proposed combination envisages acquisition of 100 per cent of the equity shareholding of Parexel International Corporation (Target) by Phoenix Parentco, Inc. (Acquirer). The Acquirer is jointly controlled by EQT Fund Management S.à r.l. (EQT) and the Goldman Sachs Group, Inc. (Goldman Sachs).

The Target is headquartered in Durham, USA. It provides biopharmaceutical outsourcing services to biopharmaceutical companies. The global activities of Target can be categorised into broad segments viz. clinical solutions and consulting, the release added.

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Indiabulls Housing Finance sells stake worth Rs 251 cr in OakNorth, BFSI News, ET BFSI

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Indiabulls Housing Finance has sold stake worth Rs 251 crore in OakNorth Holdings, and the proceeds from the sale will be added to its equity capital, according to a regulatory filing. “Indiabulls Housing Finance Ltd has sold a portion of its stake in OakNorth Holdings Ltd (the wholly owning parent company of OakNorth Bank plc) for approximately Rs 251 crore.

“The sale proceeds will be accretive to the regulatory net worth and the CRAR (capital-to-risk weighted asset ratio) of the company and will be added to the regulatory equity capital of the company,” Indiabulls Housing Finance said in a regulatory filing on Friday.

During the same month last year, the company had sold stakes in the UK-based OakNorth in two portions, and raised Rs 1,070 crore.

OakNorth Bank was launched in September 2015, in which Indiabulls Housing Finance had invested Rs 663 crore in November 2015 for a 40 per cent stake in the bank.

Shares of Indiabulls Housing Finance Ltd on Friday closed at Rs 225.70 apiece on BSE, down 1.76 per cent from the previous close. PTI KPM HRS hrs



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Sundaram Finance Holdings invests ₹480 cr in buying out stakes in portfolio companies

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Sundaram Finance Holdings Ltd (SF Holdings) said it invested about ₹480 crore in consolidating holdings in a few portfolio companies in the past one year or so.

SF Holdings primarily operates as a holding company owning a portfolio of businesses engaged in various aspects of automotive manufacturing. Significant investments include Sundaram Clayton, Wheels India, IMPAL (all listed) and Brakes India and Turbo Energy (both unlisted).

While the performance of portfolio companies is improving, it is still below their results in FY20 due to the downturn in the automotive industry driven by cyclical factors as well as the impact of the pandemic, according to a statement.

“We remain optimistic on the recovery and growth of the automotive sector in the medium term and consequently we expect a recovery in the future results of the company,” said Harsha Viji, Director, SF Holdings.

Consolidating holdings

In the past one year, the holding company utilised the opportunity to further consolidate its long-term holdings in its portfolio. “We have bought out foreign partners in Wheels India and Brakes India with an investment of ₹450 crore,” said TT Srinivasaraghavan, Chairman, Sundaram Finance Holdings Ltd.

The company increased its stake in Wheels India from 13.58 per cent to 23.28 per cent, through an acquisition of an additional 9.70 er cent stake from the foreign partner (Titan Europe) for a total consideration of ₹100 crore. The combined holding of the Indian promoters in Wheels India now stands at 57.53 per cent.

In Q1 this year, SF Holdings completed the acquisition of an additional 7.71 per cent stake in Brakes India Pvt Ltd for a total consideration of ₹350 crore from the foreign partner ZF International, taking its stake from 6.67 per cent to 14.38 per cent. The Indian promoters now own 100 per cent of the company.

The company also consolidated its shareholding in its foundry portfolio by acquiring a 6.84 per cent stake in Flometallic India Pvt Ltd and consequently the stake in Flometallic has increased from 40 per cent to 46.84 per cent.

Carbon fiber biz

SF Holdings made an investment of ₹23.71 crore in the carbon fiber business of Mind S.r.l., Italy for a 40.6 per cent stake.

“The carbon fibre market, though nascent in India now, has solid potential to grow in the long term, and the technology and expertise from Mind S.r.l will help position SF Holdings well in the market. In the long term, the carbon fiber operations could get partially shifted to India, which is expected to decrease manpower cost and expand margins,” said Srivats Ram, Director, SF Holdings.

SF Holdings reported net profit of ₹5.13 crore for the quarter ended June 30, compared to ₹2.85 crore in the year-ago quarter. Revenue stood at ₹10.50 crore (₹9.30 crore). Consolidated profit, including share of associate’s profit, was ₹31.58 crore against a loss of ₹9.89 crore a year ago.

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Axis Bank buys 5.55% stake in financial technology firm IBBIC

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Axis Bank on Tuesday said it bought 5.55 per cent stake in financial technology firm IBBIC.

The bank has subscribed to 50,000 equity shares of face value of ₹10 each fully paid up of IBBIC for a consideration of ₹10 per equity share constituting 5.55 per cent of the issued and paid up capital of IBBIC, Axis Bank said in a regulatory filing.

DLT solutions

Incorporated in May this year, IBBIC platform offers distributed ledger technology (DLT) solutions to the Indian financial services sector.

“Equity ownership of IBBIC is aimed at providing DLT solutions for the financial services sector,” Axis Bank said.

The equity is acquired for a cash consideration of ₹5 lakh, it said.

DLT, more commonly known as blockchain technology, is a protocol to enable secure functioning of a decentralised digital database. It stores information securely using cryptography.

Stock of Axis Bank traded 2.47 per cent down at ₹737.45 apiece on the BSE.

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S&P revises rating outlook on ICICI Bank to ‘stable’

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S&P Global Ratings has revised its rating outlook on ICICI Bank to stable from negative.

It has affirmed its ‘BBB-’ long-term and ‘A-3’ short-term issuer credit ratings on the private sector lender as well as its ‘BBB-’ long-term issue rating on the bank’s senior notes.

“We revised the rating outlook to reflect our view that ICICI Bank will maintain strong capital position over the next 24 months. The bank will benefit from the sale of stake in subsidiaries and gradual normalisation of earnings, which should reduce risks associated with its capital position,” S&P Global Ratings said in a statement on Friday.

The agency expects ICICI Bank will maintain a risk-adjusted capital ratio of more than 10 per cent over the next 24 months. “Our expectation factors in 13 per cent to 14 per cent credit growth for the bank, an improvement in earnings, and sale of stake in insurance subsidiaries over the period,” it said.

Stressed loans to peak

The agency however expects ICICI Bank’s stressed loans (non performing loans and restructured loans) to remain high when compared to that of international peers.

It said the bank’s stressed loans may peak at 6 per cent of total loans by March 31, but it would be lower than its estimate of 11-12 per cent for the Indian banking industry.

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Canara Bank to be lead sponsor of bad bank, to pick up 12% stake

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The Board of Canara Bank has given in-principle approval for participating in the National Asset Reconstruction Company Ltd (NARCL) as a sponsor by taking 12 per cent equity stake.

The Bengaluru-headquartered public sector bank has sought the Reserve Bank of India’s approval for the same, the Bank said in a regulatory filing.

Banks such as State Bank of India, Bank of Baroda, Bank of India and IDBI Bank are expected to take up to 10 per cent stake in NARCL.

Stressed consortium loans (₹500 crore and above) will be transferred to NARCL. Banks have so far identified 22 stressed assets aggregating about ₹89,000 crore for transfer to NARCL.

Overall, stressed loans aggregating up to ₹2 lakh crore are expected to be transferred by Banks to the company.

Padmakumar Madhavan Nair (Chief General Manager with SBI’s Stressed Assets Resolution Group) has been appointed as MD & CEO of NARCL.

In her Union Budget speech on February 1, 2021, Finance Minister Nirmala Sitharaman said that an Asset Reconstruction Company (ARC) and an Asset Management Company (AMC) would be set up to consolidate and take over the existing stressed debt and then manage and dispose of the assets to Alternate Investment Funds and other potential investors for eventual value realisation.

Indian Banks Association (IBA) is the Nodal Agency for constituting the ARC and AMC, designated as National Asset Reconstruction Company Ltd (NARCL) and India Debt Management Company Ltd (IDMCL), respectively.

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Anchor investor Bay Tree India cuts stake in YES Bank to 5.40%

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Bay Tree India Holdings I LLC has cut its stake in YES Bank further from 6.03 per cent as at March-end 2021 to 5.40 per cent now.

Bay Tree India Holdings (BTIH) had 7.48 per cent stake in YES Bank as at December-end 2020.

BTIH, which is a part of New York-based Tilden Park Capital Management, was the biggest anchor investor in YES Bank’s further public offer (FPO) in July 2020.

It invested about 55 per cent of the ₹4,098 crore the bank mopped up from anchor investors. Overall, the bank raised ₹14,850 crore (net of share issue expenses) through the FPO.

Along with BTIH, Axis Bank and Kotak Mahindra Bank, too, cut their stake in the private lender in the fourth quarter of FY2021.

As at March-end 2021, Axis Bank and Kotak Mahindra Bank’s shareholding in YES Bank came down to 1.96 per cent (2.39 per cent as at December-end 2020) and 1.52 per cent (1.76 per cent), respectively.

State Bank of India (SBI) continues to be the biggest investor in YES Bank, with 30 per cent stake. India’s largest bank reduced its stake in the private sector bank from 48.21 per cent to 30 per cent in the second quarter of FY21.

Troubled financials

YES Bank reported a net loss of ₹3,788 crore in the fourth quarter ended March 31, 2021 against a net profit of ₹2,629 crore in the year ago quarter.

In the reporting quarter, the bank made a substantial provision of ₹6,510 crore towards bad loans against ₹1,100 crore in the year ago quarter.

The bank’s net interest income was down 22.5 per cent year-on-year (y-o-y) to ₹987 crore. Non-interest income rose 36.6 per cent y-o-y to ₹816 crore.

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