Mahindra and Mahindra sells entire stake in RBL Bank for ₹678 crore

Mahindra and Mahindra (M&) has sold its entire stake in lender RBL Bank for ₹678 crore, the automaker said in an exchange filing on Thursday, November 6. The sale comes days after the lender announced Emirates NBD's plans to acquire a majority stake in RBL Bank, marking a major foreign investment in India's banking sector.

The company acquired a 3.53% stake in RBL Bank as a treasury investment in 2023 with a payment of ₹417 crore. On July 26, 2023, Mahindra and Mahindra informed the exchanges regarding the investment, while noting that it would increase its share based on pricing, regulatory approvals and required procedures. According to M&M, the sale on Thursday has resulted in a 62.5% gain.

“We refer to our letter dated 26th July 2023, wherein the Company has informed about the acquisition of a 3.53% stake in RBL Bank as a treasury investment at a cost of Rs. 417 crores. In furtherance to above, we would like to inform you that the Company has today sold its entire stake in RBL Bank for a consideration of Rs. 678 Crores representing a 62.5% gain on the investment,” M&M's latest exchange filing read.

Mahindra and Mahindra share price

M&M shares surged 1.44% to ₹3,633 apiece at around 10:12 am on Thursday, November 6. The auto giant made the announcement during the market trading hours on Thursday, November 6. M&M share price opened at ₹3,603.45 per share on the BSE on Thursday.

Meanwhile, RBL Bank shares rose 0.54% to ₹325.75 apiece following the announcement. The lender's share price opened at ₹326.15per share on the BSE.

RBL Bank's Emirates NBD acquisition

M&M's latest move comes days after the lender, during its quarterly earnings announcement, informed that Emirates NBD plans to acquire a majority stake in RBL Bank for $3 billion, or approximately ₹26,850 crore, marking the largest-ever foreign direct investment and equity fundraise in the Indian banking sector. RBL Bank made the announcement months after the RBI granted in-principle approval to the Dubai bank to establish a wholly owned subsidiary in India.

Based on regulatory and other approvals, Emirates NBD will be designated as the promoter of the domestic bank upon completion of the transaction. Accordingly, it will also have the right to nominate directors to the board of the bank.