 "US fund manager Pabrai buys 19.6 mn shares of South Indian Bank")
He bought the shares through his Pabrai Investment Fund (PIF) for Rs 32.50 each. He bought 145,45,500 shares from Renuka Ramnath's Multiples Equity and the rest from the open market.
PIF has big investments in a number of leading companies such as Bank of America, Goldman Sachs, Horsehead Holding and General Motors.
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According to reports, he'd found SIB to have a strong regional presence and good technology network. It is also a possible acquisition for a big-bulge bank which wishes to expand. The private bank has a strong deposit franchise, robust loan growth and improving asset quality. The annual profit growth has been consistent at about 21 per cent over the past five years and the valuations, at about 1.3 times book value, are reasonable. The stock offers a dividend yield of 2.15 per cent.
According to a source, there was a lot of interest in the bank's shares for the past couple of weeks, with about 40 million shares having been exchanged in the past week. The source said the change in the government and the economic climate made SIB a sensible investment. He added there was optimism on the first quarter results, scheduled to be announced on the July 16.
SIB earned a net profit of Rs 125 crore in 2013-14 and its net non-performing assets are about 0.78 per cent of the total. It has foreign institutional investment of 41.69 per cent.
It is also certain that a similar interest is there on another Kerala-based private sector lender, Federal Bank. Gulf-based billionaire M A Yusuff Ali has 315,76,820 shares (3.69 per cent), worth Rs 400 crore in its equity. In January, he'd bought 30 mn shares of SIB at Rs 21 each, while Ramnath's Multiple Equities had purchased 20 mn shares at Rs 22 each. Last week, the price rose by Rs 3 a share to Rs 33, thanks to the latest surge of big interest.