M&M confirms buying 3.53% stake in RBL Bank for Rs 417 crore

M&M’s name did not appear in June shareholding of RBL Bank

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Mahindra & Mahindra (M&M) on July 26 confirmed that it has acquired a stake of 3.53 percent in private lender RBL Bank for Rs 417 crore.

"We have acquired a 3.53 percent stake in RBL Bank as an investment at a cost of Rs 417 crore," it said in a regulatory filing, hours after Moneycontrol reported that a Mahindra Group entity has likely picked up nearly four percent stake in the bank.

M&M added that "it may consider further investment subject to pricing, regulatory approvals and required procedures". However, "in no circumstance will it exceed 9.9 percent", the company clarified.

The clarification comes after Moneycontrol, citing sources, reported that Mahindra Group is keen on picking up 15-25 percent stake if it gets the approvals to be a strategic shareholder of RBL Bank.

Notably, M&M’s name did not appear in the bank's June shareholding.

The Mahindra Group's investment in the financial services sector is primarily channeled through its group company, Mahindra & Mahindra Financial Services.

RBL Bank has had a bumpy last few years. Vishwavir Ahuja stepped down as its MD & CEO in December 2021 as the Reserve Bank of India (RBI) did not extend his term. The central bank, during the same month, had appointed its own official on the bank’s board.

The sudden exit of Ahuja and RBI’s action had put the lens on the private lender's financial strength and asset quality. A source from the investor community told Moneycontrol, “We sense that the regulator is looking for a long-term solution for RBL Bank.”

The shares of RBL Bank spiked in the trading session on July 26, and settled at Rs 238.80 apiece on the BSE, which was 7.13 percent higher as against the previous day's close. Year to date, RBL stock has gained 32.01 percent.

On the other hand, on July 26, shares of M&M declined by 1.26 percent, closing at 1,545.90. Year to date, the stock has provided a return of 22.41 percent.