By Julia Fioretti
Bandhan Bank Ltd.’s primary shareholder offered 106 billion rupees ($1.4 billion) of its stake in India’s most profitable bank to fulfill the regulator’s ownership principles.
Bandhan Economical Holdings Ltd. sold 337.4 million shares in the Indian lender at 313.1 rupees in a block trade on Monday, in accordance to deal teams observed by Bloomberg Information. The company’s shares plunged 11% to 307 rupees at 11:21 a.m. in Mumbai, heading for the largest loss since March 30.
The most up-to-date sale can help founder and Main Government Officer Chandra Shekhar Ghosh slash his stake to 40% from 60.95%, according to info out there as of June.
The RBI imposed limitations on department expansion by Bandhan Bank, which specializes in lending to modest borrowers, soon after it failed to decrease its stake to 40% last 12 months. Bandhan Bank then agreed to combine with mortgage financier Gruh Finance Ltd. in a $11.7 billion offer to pare founder’s stake as mandated, subsequent which the central bank partially relaxed its curbs on the lender.
“RBI is extremely clear that shareholding in personal financial institutions need to be diversified as it reduces concentration risk,” Karthik Srinivasan, team head, economical sector ratings at ICRA Ltd., the local arm of Moody’s Traders Assistance. “The urgency of stake sale by Bandhan founders shows that RBI is on its monitor on its policies regarding shareholding in non-public banks.”
The central bank is at this time examining its norms on shareholding in personal banking companies, which stipulate founders cut their stake to 15%, as it aims to enhance corporate governance in a sector plagued by poor financial loans.
Some of Bandhan Bank’s profitability metrics, which include return on assets and return on equity are the best amid Indian financial institutions.
Credit Suisse Securities (India) Pvt., J.P. Morgan India Pvt., Goldman Sachs (India) Securities Pvt. and JM Monetary Institutional Securities Ltd. are joint bookrunners for the offer.
–With assistance from Suvashree Ghosh.