12 entities express interest to acquire Canara Bank’s stake in Can Fin Homes3 min read . Updated: 11 Sep 2019, 11:05 PM IST
- The public sector bank expects to get ₹1,000 crore for its 29.99% stake in its housing finance arm, says CEO R.A. Sankara Narayanan
- The bank has also engaged a reputed advisory firm to carry out the legal due diligence on Can Fin Homes
Mumbai: Public sector lender Canara Bank has received 12 expressions of interest (EoIs) for its stake in Can Fin Homes Ltd from “serious investors", chief executive R.A. Sankara Narayanan said.
The bank is expecting to get ₹1,000 crore for its 30% stake in the housing finance arm, Narayanan told reporters on Wednesday.
“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 7 September that the bank is seeking EoIs from prospective buyers to purchase 30% stake in Can Fin Homes Ltd. 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 this year, 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 Canfin 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 Ltd 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% stake in the publicly listed home finance company. Singapore sovereign wealth fund GIC Pte. Ltd owns a 13.45% stake, which it had bought in March 2017 from Canara Bank for ₹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% 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 ₹329.07 crore for the three months ended 30 June, compared with ₹281.49 crore in the year-ago period.
Profit was higher than ₹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% in the June quarter compared with 11.90% in the March quarter and 13% in the year-ago period.
Canara Bank’s equity capital as on 31 March 2019 was ₹753.24 crore, of which the government held 70.62% with the public holding the remaining 29.38%.
On 30 August, the government announced that it will infuse ₹6,500 crore into Canara Bank as part of its ₹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 ₹16,000 crore into Punjab National Bank, ₹11,700 into Union Bank of India, ₹7,000 crore into Bank of Baroda, ₹2,500 crore into Indian Bank, ₹3,800 crore into Indian Overseas Bank, ₹3,300 crore into Central Bank of India, ₹2,100 crore into UCO Bank, ₹1,600 crore into United Bank of India and ₹750 crore into Punjab and Sind Bank.
Mint reported on 16 June that Canara Bank is raising ₹6,000 crore through a qualified institutional placement and has invited bids to hire five merchant bankers for the process.
“The bank intends to tap capital markets via Qualified Institutional Placement for an amount up to ₹6,000 crore. Further, the bank intends to initiate the process relating to the selection and appointment of up to five book running lead managers or merchant bankers to prepare the requisite documents and to undertake various activities in relation to the QIP," the notice said.