Premji Invest inches closer to majority stake acquisition in Nainital Bank

Bank of Baroda, a public sector lender and the majority shareholder holding around 98% of Nainital Bank, is expected to divest its entire stake

Premji Invest, the family office of Wipro founder Azim Premji, is in advanced talks to acquire a majority stake in Nainital Bank, a subsidiary of Bank of Baroda, reported The Economic Times (ET), citing sources familiar with the matter.
 

The deal, currently in advanced stages, is anticipated to value the Uttarakhand-based bank at around Rs 800 crore, said the sources.

“Premji Invest has signed a term sheet and the due diligence process is over. However, the final decision is yet to be made on the acquisition," ET quoted a source as saying.

“In the first tranche, around 51 per cent shares will be sold and eventually the remaining ownership will be [divested],” sources added.

 

Bank of Baroda, a public sector lender and the majority shareholder holding around 98 per cent of Nainital Bank, is expected to divest its entire stake.

Premji's entry into banking sector

Premji Invest, known for its active participation in India's startup and technology landscape with assets under management exceeding $10 billion, boasts significant holdings in various ventures, including Policybazaar, Lenskart, and Kreditbee.

Although the investment firm already has interests in non-banking finance, insurance, and payment infrastructure sectors, this marks its first venture into banking.

Tech startups and banking

In a trend reflecting the convergence of technology and finance, Bengaluru-based fintech Slice obtained regulatory clearance for a merger with Northeast Small Finance Bank. Similarly, BharatPe, in partnership with financial services major Centrum, secured a 49 per cent stake in Unity Small Finance Bank.

According to regulatory filings, Nainital Bank operates a network of 168 branches across Uttarakhand, Rajasthan, Uttar Pradesh, Delhi, and Haryana. As of September 2023, the bank's loan portfolio stood at Rs 4,654 crore, while total deposits amounted to Rs 7,809 crore.

“The RBI was keen on bringing on board a tech-first player to participate in the Nainital Bank divestment plan. The reason for that was to push a tech transformation at the lender. Many other fintechs and investors were also in the fray for picking up the stake up for sale,” a senior fintech industry executive who had evaluated the deal told ET.

In a report dated October 6, 2023, tech news platform Techcrunch highlighted the interest expressed by stock broking giant Zerodha, digital payments firm MobiKwik, and other entities in acquiring Nainital Bank.