MUMBAI: Canadian billionaire Prem Watsa’s Fairfax Financial Holdings is looking to acquire more than 10% stake in Kerala-based Catholic Syrian Bank, people familiar with the development told ET. Watsa’s latest Indian bet is seen as part of the Canadian billionaire’s plan to establish a conglomerate in India with interests in fields ranging from banking, insurance, broking, infrastructure, and chemicals.
A proposal to this regard has also been submitted to the Reserve Bank of India, sources said. “The bank needs constant capital …we are talking to many investors including Fairfax,” said S Santhanakrishnan chairman, Catholic Syrian Bank. A mail sent to Fairfax Financial did not elicit any response until press time Sunday.
The banking regulator in May issued new guidelines on ownership in private sector banks by bundling shareholding patterns into two broad categories of individuals (natural persons) and legal entities/institutions.
Acquisition of shareholding in a private sector bank by foreign entities will continue to be subject to the extant FDI policy, and the aggregate foreign ownership through FDI, FII/NRIs cannot exceed 74% of paid-up capital. The RBI had also retained the provision of seeking its prior mandate if someone wants to increase shareholding/voting rights to 5% or more.
The new norms, which envisage diversified shareholding in private sector banks, are aimed at helping them meet the additional capital under the Basel-III regulations and to rationalise the ownership limits, the RBI had said.
Catholic Syrian Bank, which had applied to the market regulator Sebi last year for an IPO, shelved the plan due to choppy market conditions. At the end of March 2016, the bank suffered losses of over Rs 100 crore with gross non-performing asset ratio of over 5.62%.
At the end of 2015, the bank had advances of Rs 9,472 crore and a deposit base of Rs 14,475 crore. The bank has a network of over 430 branches and more than 240 ATMs across India. With over 1.3 million customers, it largely focuses on expatriates working in the Gulf who remit their money back home.
“It’s very healthy if a certain order of governance is established and a good amount of business expertise is brought to the table by the new investor,” said Ashvin Parekh of Ashvin Parekh Advisory Services. “As far as consolidation is concerned, I think it’s more case-to-case basis than an industry-wide phenomenon.”
Fairfax India Holdings Corporation and Fairfax Financial Holdings Ltd have been steadily expanding their footprint in India. In March, the company announced an acquisition of 33% stake in GVK’s Bangalore International Airport Ltd for Rs 2,149 crore. Fairfax group’s committed investments in India have crossed over $1 billion since launching an India-dedicated investment company at the end of 2014.
Last year in November, Fairfax India acquired a 21.85% stake in the financial services firm IIFL Holdings for Rs 1,341.37 crore through an open offer.
On October 31, ICICI Bank announced the sale of a 9% stake in its general insurance subsidiary ICICI Lombard General Insurance Co to Fairfax Financial for Rs 1,550 crore. Also, last year in July, Fairfax India acquired a 74% stake in commodity warehousing and collateral management company National Collateral Management Services Ltd for about Rs 800 crore. The group has also invested in Thomas CookBSE 1.12 % (India) Ltd and Sterling Resorts.
Source: Economic Times