Morgan, Fidelity buy 10% in DCB

Morgan Stanley and Fidelity picked up over a 10 per cent stake in Development Credit Bank (DCB), which made its debut on the bourses today.

According to bulk deals data released by the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), Morgan Stanley & Co International bought 9.94 million shares, representing a 6.73 per cent stake, in DCB for Rs 44.32 crore.

This is significant because going by the acquisition norms in listed banks outlined by the Reserve Bank of India (RBI), no entity can buy more than 5 per cent stake in any bank without the banking regulator's approval.

Sources close to the central bank said Morgan Stanley would need to move the RBI for permission for the 6.73 per cent acquisition in DCB.

"The RBI will decide whether it should be allowed to retain the stake or would need to bring it down to 5 per cent," sources said.

Morgan Stanley acquired 6.46 million shares on the NSE and 3.48 million shares on the BSE. Its average purchase price was Rs 44.40 a share on the NSE and Rs 44.87 on the BSE.

Fidelity Far East Fund bought 6 million shares, or a 4.06 per cent stake, for Rs 25.39 crore. It acquired 2.05 million shares on the BSE and 3.95 million shares on the NSE.

ABN Amro also bought 780,000 shares for Rs 3.54 crore, according to data released by the BSE and the NSE.

When contacted, Gautam Vir, managing director of DCB, declined to comment, saying he did not have access to the trade data of the exchanges. "The DCB registrar will get the information only tomorrow," he added.

The DCB stock today listed at Rs 35.35, nearly a 36 per cent premium over the issue price of Rs 26, on the BSE. The stock went up to Rs 48.65 in intra-day trade before its close at Rs 47.50.

The paid-up equity share capital of the bank is Rs 147.63 crore. The bank raised Rs 186 crore through its initial public offering.