In a chat with ET Now, Rakesh Sharma, Canara Bank , says plans to bring in a strategic investor who will add some value. Edited excerpts
Is it true that you are looking at diluting Can Bank’s stake in Can Fin HomesBSE -2.16 %?
It is a basically a strategic decision. We have around 43% investment in Can Fin Homes. So just to strengthen our capital number one, our capital adequacy ratio as on September was 12.19. We will bring some strategic investor who will bring some value to Can Fin Homes.
How much stake are you looking to dilute?
Around 12 to 13%, presently we will keep it around 30%.
Have any of the strategic investors already evinced interest?
There are many but we are talking to them number one we are not so desperate also that immediately we have to go, whenever we get good valuation so we will sell so it is basically as I said my capital adequacy ratio is 12.19 it is quite good. So whenever we get a good valuation and good investor who can add value to Can Fin Homes and make valuations further high and so that time we will decide.
Your stock has done exceedingly well. If I look at the price to book for Can Fin Homes, it is almost at a book of 2 plus. I do not think there is anything wrong with the current valuations.if the current valuations are decent, can I assume that a stake sale is coming soon?
Various investors are evincing interest. Two things are there. One, of course, we have to dilute to strengthen our capital. Second, the investor should be able to add value to Can Fin Homes also.
Our performance financial indicators are excellent and we want to further strengthen it.
The Reserve Bank of India has also indicated to PSU banks that they should get out of some of the non-core investments. Would you consider your investment in Can Finance Homes as a non-core investment which eventually will sell out?
We have 43% stake. After selling 13%, we still have 30%. Our business model is different. They are totally different from us so like they take their own decisions but one way, of course, this Can Fin Homes have been promoted by Canara Bank so that add values to Can Fin Homes also. We have some, of course, some Directors from Canara Bank and then so that adds value to Can Fin Homes.
Just curious to understand you have a sizable 43% stake in Can Fin Homes why is it that you diluting just 12% to 13%? You have headroom to dilute more?
But at this juncture, we have decided to dilute 13% to bring it down to 30% and that again I will rephrase of course at the cost of repetition that it is like we are not desperate so we will do it at the appropriate time.
