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Bandhan Bank to explore strategic acquisitions to pare promoter stake

Bandhan Bank told investors that it would explore inorganic route to pare promoters stake. In a hurriedly organised telephonic interaction with investors on Saturday, the Bandhan management tried to calm investors who turned anxious after Reserve Bank of India punished the bank for failing to reduce promoters’ stake to below 40 per cent.

Investors in Bandhan Bank include mutual fund houses, financial institutions, qualified foreign investors and employees.

The bank management told them that promoters may also sell their holdings directly in the secondary market if inorganic route does not work out fast, according to two people who were part of the interaction.

Inorganic route means acquiring another entity which would automatically bring down promoters stake.

“Taking the inorganic route has to be a strategic one. And it needs to fit well with the bank’s business philosophy and has to be a viable proposition,” one of the persons cited above said.

Last month, Bandhan Bank backed out of the race to acquire PNB Housing Finance after showing interest initially. Analysts said that housing finance business carries a low margin which does not suit Bandhan’s high margin business.

RBI on Friday restricted Bandhan Bank from opening branches freely and freezed remuneration of founder managing director Chandra Shekhar Ghosh at existing level. RBI told the private lender to take prior permission before branch expansion.

The bank failed to bring down the shareholding of Non Operative Financial Holding Company (NOFHC) to 40% as mandated under the licensing condition.

The bank commenced operations in August 2015 and listed on the bourses in March 2018, fulfilling the listing obligation under licensing agreement. Bandhan Financial Holdings Ltd owns 82,28% in Bandhan Bank which has to be brought down to 40%. The deadline for that exercise was August 22.

As many as 16 mutual funds collectively hold 3.17% in Bandhan, while eight local institutions hold 0.32% and 98 foreign investors hold 5.24%.

The bank said Friday in its filing to stock exchanges that it was taking necessary steps to comply with the licensing condition to bring down the shareholding.

Bandhan has already built a network of 937 branches, 2764 door step service centres and 476 ATMs.

Analysts believe that Bandhan Bank’s share price would open lower on Monday following RBI’s restrictions. Shares closed Friday at Rs 564 on BSE as against its highest level of Rs 741. Bandhan’s Friday announcement came after the market hours.


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