In an effort to bring bring down promoter shareholding to meet the Reserve Bank of India (RBI) norms, Bandhan Bank promoter entity Bandhan Financial Holdings Ltd, will be selling shares worth Rs10,500 crore or $1.4 billion, through block trades on the stock exchanges, according to deal terms seen by Mint.
Bandhan Financial Holdings, which currently owns a 60.95% stake in the bank, will be selling 337 million shares representing a 20.95% stake through the share sale, the terms show. The block trades will be executed on Monday, 3 August.
A floor price of Rs311.1 per share has been set for the share sale, which is a discount of 9.89% to Friday's closing price of Rs345.25 apiece.
Investment banks Credit Suisse, JP Morgan, Goldman Sachs and JM Financial are advising Bandhan Financial Holdings on the share sale.
A text message sent to Bandhan Bank managing director and chief executive Chandra Shekhar Ghosh did not elicit a response till press time. Spokespersons for Credit Suisse, JP Morgan, Goldman and JM Financial could not be immediately reached for a comment.
As per RBI's bank license norms, promoter shareholding in a bank has to be brought down to 40% three years after launching operations. Bandhan's three year deadline ended in September 2018, post which the central bank had imposed restrictions on expansion of branch network and CEO remuneration. However, citing the efforts made by the bank in reducing its promoter shareholding, RBI lifted the restrictions in February 2020, with certain conditions.
In January 2019, Bandhan Bank had acquired HDFC Ltd-owned Gruh Finance Ltd through an all share deal, as part of its efforts to bring down promoter shareholding. Prior to the deal, Bandhan Financial Holdings held a 82.28% share in the bank. The acquisition also helped the bank expand its housing finance portfolio.
Bandhan, which received the RBI's in-principle approval to launch a universal bank in 2014, went public in 2018 in an IPO which saw the lender sell shares with Rs4,470 crore.
Last month, Bandhan reported a 31.6% year-on-year fall in its net profit to ₹550 crore for the June quarter due to additional provision on standard assets--amounting to ₹750 crore--for covid-19.
Net interest income (NII) for the quarter rose nearly 15% year-on-year (YoY) to ₹1,811 crore while non-interest income grew 16.9% to ₹387 crore.
Gross non-performing assets (NPAs) as on June 30 fell to ₹1,007 crore from ₹1,020 crore in the year-ago period. Net NPAs fell 3.45% to ₹336 crore from ₹348 crore a year ago.
Gross NPAs, as a percentage of gross advances, were at 1.43% compared with 1.70% as of June, 2019 and 1.48% as of March, 2020.