Diversified business group Muthoot Pappachan Group has picked up 1 per cent stake in the private sector Catholic Syrian Bank whose largest shareholder Bangkok-based Sura Chansrichawla was asked by RBI to lower his stake to 10 per cent.
"We have picked up one per cent stake in Catholic Syrian Bank (CSB) through open market transactions and are keen to increase our holding to five per cent over the next three to six months as per the regulations," Muthoot Pappachan Group Chairman and Managing Director Thomas John Muthoot told PTI from Thiruvananthapuram.
He, however, did not disclose the deal size.
To a specific query on whether the stake was bought from the bank's largest stakeholder, NRI entrepreneur Sura Chansrichawla, Muthoot said, "We picked up the shares from the open market."
"The Muthoot Pappachan Group has agreed to pick up 0.99 per cent stake in our bank and they are in talks to increase the stake to five per cent," one of the CSB directors K Ipe Peter told PTI in Thrissur, where the bank is headquartered.
On valuation, Muthoot said, "We didn't pay any premium as there are plenty of shares available in the market." As to what does it signify for the largest financial services group in Kerala, Muthoot said, "this is a good investment opportunity for us and are keen to invest more in this."
The share purchase comes close on the heels of Edelweiss Capital late last week raising its stake in CSB to 4.9 per cent for an undisclosed amount from the earlier one per cent.
The Thiruvananthapuram-headquartered Rs 20,000 crore Muthoot Pappachan Group is into non-banking financial services such as gold, home and auto loans, realty, power and hospitality among others. Its NBFC arm Muthoot Finance has a network of over 800 branches across the country and is primarily into gold loan business.
The unlisted CSB has been in news for some time ever since Chansrichawla, who now holds a little over 20 per cent stake in the bank, was asked by RBI to bring down his stake to 10 per cent by last March.
The RBI came down on Chawla when his stake crossed more than 30 per cent a few years back. Chawla had earlier failed to sell his shares to a clutch of investors in March as many of the prospective buyers failed to meet the eligibility criteria of the central bank. Following this, he sought permission to extend the deadline by two more years.
Last year, another Kerala-based lender Federal Bank had expressed its interest to take over the unlisted CSB, but the move didn't fructify following differences over valuations.
Other major stakeholders of CSB are engineering major L&T, Federal Bank. A group of local investors together hold around 15 per cent in the bank.
Following this, there were also attempts by the Thrissur-based Catholic community to take over the bank by raising funds from non-resident Keralites and they had even reportedly got the blessings of the city's archbishop as well.
It may be noted that Chawla, who is the single largest shareholder in the Thrissur, Kerala-based CSB, is under regulatory pressure to bring down his stake to 10 per cent.
The private lender CSB had a deposit portfolio of Rs 6,332 crore as of last fiscal end and a loan book of Rs 3,683 crore. It had posted a net profit of Rs 37.18 crore on a total income of Rs 656.19 crore last fiscal, according to the information available on its website.
