After negotiating for bulk sale, IDBI offloaded 10 percent in CARE to LIC for Rs 421 crore. The bank's deputy MD BK Batra informed that the bank has strategic stake in various companies which are quite valuable today.
IDBI offloaded 10 percent in CARE to LIC for Rs 421 crore after negotiating for bulk sale. The sale will help improve IDBI's capital adequacy ratio (CAR) by 15 bps. Even after offloading, IDBI still holds 0.67 percent in CARE and will look for opportune time to sell the balance stake, says the bank's deputy MD BK Batra. He informed that the bank has strategic stake in various companies which are quite valuable today.
Below is the transcript of BK Batra’s interview with Ekta Batra & Anuj Singhal on CNBC-TV18
Ekta: I wanted to start by asking you about the bank recently selling 10 percent stake in CARE. How much did you all rake up whom did you all sell it to and why?
A: IDBI Bank holds a strategic stake in several companies which has been with us over the last several years overall history of 50 years odd we have made investment in many financial sector entities and today they are quite valuable. So looking to the timing, looking to their price we keeping on seeing whether it is a right time to unlock value. So this time we looked at CARE and we found that its pricing was ruling right and we could monetise a portion of the holding that we have. Presales we had 16.67 percent of the CARE’s equity and we decided to put on black 10 percent out of that. This sale has been made through a negotiated bulk sale to LIC.
Ekta: How much did you'll make totally from the sale and how much will it improve your capital adequacy ratio by?
A: Total sale price is Rs 421 crore around Rs 421 crore and since the face value is very small almost the entire money is getting earned by way of capital gains and minus whatever tax we will have to pay we will be adding a substantial sum to our capital. It will improve our existing capital adequacy ratio by 15 basis point.
Anuj: Will you now look to sell the remaining stake as well in care that you now hold?
A: We are left with now 6.7 percent and we will look for an opportune time to divest it but immediately we may not be selling it.
Anuj: What about the big one the stake in National Stock Exchange (NSE) now?
A: We have a small stake about 5percent now invested in NSE but selling it also depends upon getting the right price. As we all know NSE is not a listed entity so finding buyers for NSE is not that convenient shall I say? Because only those who believe in its future value and who think they will be able to unlock that value sometime in future date get interested in it. So there are limited number of players who would be interested in taking up such a space. So we will see as and when an interested buyer comes around and offers the right price we would not mind divesting that too. Currently there is no proposal on the table.
Ekta: Does the bank have exposure to Jindal Steel and Power (JSPL) and if so are you worried about your exposure simply because of may be the uncertainty that the company has been facing off late?
A: While it would not be appropriate for me to comment specifically on a company I would like to set any concern at rest by saying that JSPL otherwise is a well performing company. It is financially strong company and group. We have small exposure there we do not see any sort of concern about servicing of that because of the recent issue. We hope it will get sorted out.
Ekta: Any progress on the corporate debt restructuring (CDR) approval for Pipavav Defence?
A: I have earlier also mentioned that we are expecting the approval process to be completed within this month and I think it is well on its way to achieving the necessary numbers.