Private equity firm Warburg Pincus has sought approval from the Reserve Bank of India to retain its 22% stake in Au Financiers, a finance company that received regulatory clearance to start a small finance bank. According to existing rules, no single entity, except the promoters, can hold more than 10% of a bank.
Au Financiers, which got the licence from the RBI in last Friday, will be renamed Au Small Finance Bank and is set to start banking operations in April 2017. “The message we get from the stakeholders is that none of them want to dilute the stake in Au Financiers,” said Sanjay Agarwal, founder and managing director of Au Financiers.
Warburg Pincus declined to comment. “Warburg Pincus may seek RBI approval on grounds that they would be a noninterfering, silent investor and would renounce their voting rights to retain their stake,” said a person familiar with the matter. Agarwal declined to comment on this.
“We don’t need capital now since we raised Rs 800 crore by selling our housing finance company. However, if the existing shareholders want to exit the company, they can either look at bilateral deals or opt for an initial public issue,” said Agarwal. Early this calendar year, Au Financiers sold its housing finance company to Kedaara Capital and Swiss firm Partners group.
This means Au Small Finance Bank will have to be listed by April 2020. Also, the existing entities with more than a 10% stake will have to lower their holding by September 2018 under the regulations.
Au Financier has about 4 lakh customers and 300 branches spread across the Northwest. “We want to create a customer-centric digital bank wherein the customer who walks in the branch does not have to do any paperwork to deposit or withdraw money. We will use a biometrics identification system.
