Bandhan Bank Share Price Jumps Over 7% As IHC, First Abu Dhabi Bank Eye Stake In Promoter Entity
Add Preferred News Source
The proposed transaction could provide an exit to long-term investors GIC and IFC, which together held 30.3% of Bandhan Financial Services at March-end. The discussions are still at an early stage.
Shares of Bandhan Bank jumped over 7% in Tuesday's trade after reports said Abu Dhabi's International Holding Company (IHC) and First Abu Dhabi Bank were among investors exploring a potential stake in Bandhan Financial Services Ltd (BFSL), the promoter entity linked to the private sector lender.
At around 10:30 am on October 13, Bandhan Bank shares were trading at ₹169.13 on the NSE, up ₹11.63 or 7.38%. The stock had climbed as much as 7.7% during the session as investors reacted to reports of potential investment by Abu Dhabi-based entities in the bank's promoter.
BFSL has been working with adviser Jefferies to find strategic investors for a 25-32% stake, according to an Economic Times report. The proposed transaction could provide an exit to some of its long-standing investors, including Singapore's GIC and the International Finance Corporation (IFC), which together held 30.3% of BFSL at the end of March.
The potential transaction involving their stake could be worth around $500-600 million, according to the report. Discussions are at an early stage and may not necessarily result in a transaction.
IHC, First Abu Dhabi Bank Among Potential Investors
IHC is among the investors in early-stage discussions to buy into BFSL, while First Abu Dhabi Bank and Qatar Investment Authority have also been sounded out for potential interest. Private equity firms including Carlyle and EQT are also among those approached, according to the report.
GIC and IFC have backed the Bandhan group for more than a decade and have been looking at a full or partial exit from their investments. At the end of March, the two investors together held 30.3% of BFSL, while Small Industries Development Bank of India held another 8.1%.
BFSL sits above Bandhan Financial Holdings in the group structure. Bandhan Financial Holdings, in turn, is the holding company for Bandhan Bank and held around 37.5% of the lender at the end of June.
This means the reported discussions involving IHC and First Abu Dhabi Bank relate to a potential investment in BFSL and not a direct acquisition of shares in Bandhan Bank.
Bandhan Financial Holdings is also required to bring down its stake in Bandhan Bank to 26% by 2030 under the bank's licensing framework with the Reserve Bank of India.
Bandhan Bank Share Price Rallies Over 7%
Bandhan Bank shares opened at ₹162 on Tuesday before extending gains during the morning session. At 10:40 am, the stock was trading at ₹169.13, up 7.38% from its previous close of ₹157.50.
The rally gathered pace as reports of interest from Abu Dhabi-based investors brought the promoter entity's proposed stake sale into focus.
Bandhan Group founder Chandra Shekhar Ghosh declined to comment on the reported discussions, telling ET, “We don't comment on market speculation.”
First Abu Dhabi Bank also declined to comment on the potential transaction. The discussions remain at an early stage, with no certainty yet that they will result in a deal. For Bandhan Bank shares, however, the possibility of a sizeable investment in its promoter entity was enough to trigger a sharp rally in Tuesday's session.
This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
Rochelle Britto has spent 8+ years decoding India's markets, businesses, and consumer economy, reporting for ET Prime and Times Internet along the way, covering the stories behind the numbers.
A Mumbai native and perpetual planner of the next holiday, she stays far, far away from the eternal question, “Where are we going next?” When she's not chasing headlines, she's chasing new cultures, open roads, and a bit of quiet in nature.
Right Tools, Rich Insights
