 "Indiabulls Housing Finance to acquire 40% in British bank")
Indiabulls Housing Finance plans to invest $100 million (Rs 660 crore) to acquire a 39.76 per cent stake in OakNorth Bank, a full-service lender in Britain.
This is part of the company's idea for a way to a deposit-taking franchise. The acquisition will give it an opportunity to build credentials and aid in building a comprehensive liability profile.
OakNorth Bank is focused on the structurally underserved small and medium enterprises sector (SME) in the UK, said Indiabulls.
Sameer Gehlaut, executive chairman of the Indiabulls Group, said: “With this, total investments of the Group in the vibrant economy of London would be in excess of Rs 4,200 crore.”
The regulatory approvals for this investment were the first ever to be given to an Indian corporate group to acquire a large stake in a foreign bank. The Reserve Bank of India (RBI), National Housing Bank; and the Prudential Regulation Authority of the Bank of England had approved the deal, said Indiabulls.
OakNorth is the largest non-bank lender to the SME segment in Britain, loan disbursals to the segment being the equivalent of $5 billion and loan assets due to SMEs being $2.3 bn.
The investment was identified and approved by the group's strategic investment committee for liability franchise development, headed by K C Chakrabarty, an independent director on its board and ex-deputy governor of RBI. Indiabull said this panel was constituted by the board of directors to prepare a practical road map to a deposit-taking franchise.
The deal will improve the perception of Indiabulls Housing Finance (IHF) and provide enhanced comfort to all its stakeholders, including rating agencies, it stated.
The acquisition is a strategic investment. IHF maintains its earlier expectation of 20-25 per cent annual growth across all financial parameters, as seen over the past six years.
This investment will have no impact on the policy of paying 50 per cent of profits as dividend.
