Hinduja Group flagship Ashok Leyland Ltd plans to buy an additional 19% stake in group company Hinduja Leyland Finance Ltd for Rs 1,200 crore ($160 million at current exchange rates).
The commercial vehicle maker said in a stock-exchange filing it will buy the stake from the non-banking finance company’s existing shareholders in stages over the next 12 months. It didn’t say who those shareholders are.
Hinduja Leyland Finance, which was set up in 2008, offers loans for vehicles, farm equipment and construction equipment. For 2018-19, it reported a profit of Rs 275.64 crore on revenue of Rs 2,560.64 crore.
Ashok Leyland owned a 61.84% stake in Hinduja Leyland Finance as of March 2019, according to the NBFC’s annual report. Its stake would have risen after it agreed last month to buy private equity firm Everstone Capital’s 7% holding in the NBFC.
The annual report shows that three other group companies owned a stake in the NBFC. IndusInd International Holdings Ltd had a 16.82% stake while Hinduja Power Ltd owned 6.55% and Hinduja Ventures Ltd 3.46%.
This could mean that IndusInd International is likely selling all or most of its stake to Ashok Leyland. IndusInd International is one of the promoter entities of IndusInd Bank and held a 10.6% stake at the end of December. IndusInd Ltd, another group company, owned a 3.79% stake in the bank.
Ashok Leyland’s announcement comes after the London-based Hinduja Group confirmed its intention to hike its stake in IndusInd Bank to 26% amid concerns about the lender’s health after the collapse of peer Yes Bank. IndusInd Bank said earlier this week that Hinduja Group had sought the Reserve Bank of India’s approval to increase its stake.
RBI norms require promoters of private-sector banks to pare their stake to 40% within three years, 20% within 10 years and to 15% within 15 years. This has been relaxed for Kotak Mahindra Bank and Bandhan Bank at present. IndusInd Bank had received a banking licence in 1994.
IndusInd Bank has tried to assuage investor concerns and dismissed market rumours amid a steep fall of more than 50% in its stock price this month. Earlier this month, the bank also cancelled its plans to raise funds by issuing bonds.
Last month, the bank also announced the promotion of Sumant Kathpalia as its new manging director and chief executive officer after the retirement of Romesh Sobti.