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Last Updated : Sep 12, 2019 12:49 PM IST | Source: Mint

12 entities ready to acquire Canara Bank’s stake in Can Fin Homes

 
 
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Highlights:
- The public sector bank expects to get Rs 1,000 crore for its 29.99 percent stake in its housing finance arm, says CEO RA Sankara Narayanan
- The bank has also engaged a reputed advisory firm to carry out the legal due diligence on Can Fin Homes

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Public sector lender Canara Bank has received 12 expressions of interest (EoIs) for its stake in Can Fin Homes from ‘serious investors’, Chief Executive RA Sankara Narayanan said.

The bank is expecting to get Rs 1,000 crore for its 30 percent stake in the housing finance arm, Narayanan said on September 11.

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“Many foreign as well domestic entities have approached. Twelve serious investors have shown interest. There are many entities including other non-banking financial companies (NBFCs) who have shown interest," said Narayanan, adding the bank will sell its entire stake. “We are exiting fully," he said.

Canara Bank said on September 7 that the bank is seeking EoIs from prospective buyers to purchase 30 percent stake in Can Fin Homes. In a notice to the exchanges, the bank said it intends to divest 3.9 lakh equity shares of Rs 21 face value each.

The bank has also engaged a reputed advisory firm to carry out the legal due diligence on Can Fin Homes and submit a report that shall be shared with the prospective buyer for submitting the final binding bid document, the notice said.

In June, the bank received board approval to sell part or full stake in the housing finance company. Just last year, Canara Bank had called off a move to divest its entire shareholding in housing finance subsidiary Can Fin Homes after receiving price quotations below its expectations.

Last year, private equity firms like Baring Private Equity Asia, Warburg Pincus, KKR, True North, Bain Capital, Temasek and Blackstone had shown interest in Can Fin Homes. Strategic investors such as Kotak Mahindra Bank, RBL Bank and HDFC were also in the race for the stake. Asia-focussed buyout fund Baring and HDFC were the two contenders that had submitted binding offers.

Can Fin Homes has a pan-India network of 132 branches, 20 affordable housing loan centres (AHLCs) and 20 satellite offices with a customer base of over 120,000.

Canara Bank holds a 29.99 percent stake in the publicly listed home finance company. Singapore sovereign wealth fund GIC Pte owns a 13.45 percent stake, which it had bought in March 2017 from Canara Bank for Rs 753.77 crore.

Canara Bank, one of the four anchor banks identified by the government, is on course to merge with Syndicate Bank. In the first quarter of FY20, the bank reported a 17 percent rise in net profit on a year-on-year basis on the back of lower provisions and improved asset quality.

The bank posted a net profit of Rs 329.07 crore for the three months ended June 30, compared with Rs 281.49 crore in the year-ago period. Profit was higher than Rs 284 crore estimated by a Bloomberg poll of nine analysts.

Its gross non-performing assets (NPAs), as a percentage of total advances, were at 11.70 percent in the June quarter compared with 11.90 percent in the March quarter and 13 percent in the year-ago period.

Canara Bank’s equity capital as on March 31 was Rs 753.24 crore, of which the government held 70.62 percent with the public holding the remaining 29.38 percent.

On August 30, the government announced that it will infuse Rs 6,500 crore into Canara Bank as part of its Rs 55,250-crore capital infusion in FY20.

This was part of a larger capital infusion plan with the government also saying that it aims to infuse as much as Rs 16,000 crore into Punjab National Bank, Rs 11,700 crore into Union Bank of India, Rs 7,000 crore into Bank of Baroda, Rs 2,500 crore into Indian Bank, Rs 3,800 crore into Indian Overseas Bank, Rs 3,300 crore into Central Bank of India, Rs 2,100 crore into UCO Bank, Rs 1,600 crore into United Bank of India and Rs 750 crore into Punjab and Sind Bank.

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First Published on Sep 12, 2019 12:49 pm
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