India’s largest mortgage lender HDFC is likely to sell 4.2 percent stake in Gruh Finance on June 14, multiple sources told CNBC-TV18, to comply with a requirement by the Reserve Bank of India (RBI) to facilitate the latter’s merger with Bandhan Bank.
The stake sale may be done at a floor price of Rs 290 per share, the sources said, requesting anonymity. The base deal size is expected to be around 3 crore shares with an upsize option.
HDFC has been gradually reducing stake in Gruh Finance, its low-cost offshoot, to facilitate its merger with Bandhan Bank. HDFC sold more than 4.47 crore equity shares representing 6.10 percent of paid-up capital of Gruh on May 24, 2019.
HDFC can hold no more than 9.9 percent in the bank — the limit that RBI allows a non-banking finance company to own in a private bank — according to an exchange filing in May. HDFC had sought approval for holding 14.96 percent.
“The corporation (HDFC) being a shareholder of Gruh is entitled to 14.96 per cent of post-amalgamation paid-up capital of Bandhan, based on the share exchange ratio. However, the RBI has directed the Corporation to hold 9.9 per cent or less of the paid-up capital of Bandhan, post the merger. In view of this, the corporation is required to sell such number of shares in Gruh so as to be entitled to 9.9 per cent of the post-amalgamation paid-up capital of Bandhan," HDFC said.
Gruh Finance reported revenue at Rs 2,062.65 crore for FY19 against Rs 1,687.19 crore in FY18.
In March, RBI granted its approval for the merger between Gruh Finance and Bandhan Bank. The deal was announced in January 2019.
(Response is awaited from HDFC)