Barclays picks up 4.5% in UTI Bank

The stake is worth Rs 135 cr at Rs 134.91 per share.

Foreign institutional investor (FII) Barclays Capital Mauritius Ltd today acquired a 4.5 per cent equity stake in UTI Bank for Rs 135 crore.

This is Barclays' first investment in the country. The London-based foreign institutional investor acquired 100.056 million shares from the secondary market today at an average price of Rs 134.91 per share. Citicorp Banking Corporation sold 8.84 million shares to Barclays.

"This is just a financial investment in the bank and we have no intention of increasing our holding in the private sector bank," said a source in Barclays.

Even though the investment is being made by the FII, as per the Reserve Bank of India's draft guidelines, Barclays will not be permitted to hold more than 5 per cent in the bank in view of its presence in the country as an investment bank, Barclays Capital.

"Our investment in UTI Bank demonstrates our commitment to the fast-growing financial sector in India and allows us to participate through an investment in one of the best managed private sector banks. India presents tremendous opportunities and this investment evidences our desire to be part of the India growth story," said Robert Morrice, chief executive, Barclays Asia Pacific.

The UTI Bank stock touched an intra-day high of Rs 140, before closing at Rs 136.80, up 13.67 per cent over Monday's close of Rs 120.35.

Barclays has been in India for the past 27 years and operates under a full banking licence in Mumbai. Barclays and HSBC were the lead arrangers to UTI Bank's $ 500 million syndicated loan.

The UTI Bank counter emerged as the second highest traded counter on the BSE. Total volumes accounted for more than 1.04 crore shares on the BSE. On the National Stock Exchange (NSE), the counter witnessed volumes of 12.81 lakh shares, with the scrip closing at Rs 136.40.

UTI Bank has been a favourite among foreign investors. A couple of months back, private equity investor Actis sold its 4.9 per cent holding in UTI Bank at Rs 130 per share in three separate deals to multiple buyers.

It had earlier sold 14.62 per cent shares to HSBC at Rs 90 per share. According to the latest available shareholding pattern, FIIs held 12.51 per cent of UTI Bank's equity at the end of the quarter ended June 30, 2004.

The Life Insurance Corporation of India (LIC) holds 13.46 per cent in the private sector bank and is keen to hike its stake further. The administrator of the Specified Undertaking of UTI holds 33.25 per cent, and the General Insurance Company holds a 7.12 per cent stake.