Canara Bank has called off the divestment plan of its home finance arm, Can Fin Homes Ltd, after talks with at least 12 potential suitors, including eight private equity firms, failed to make a headway.
The state-owned lender, which holds a 30% stake in the listed company, said in a disclosure that the talks were called off over valuation mismatch.
Canara bank had appointed five investment banks – Jefferies, ICICI Securities, Motilal Oswal, EY and JM Financial – to find a potential buyer for Can Fin Homes.
The move had evinced interest from eight private equity firms, including Baring Private Equity Asia, Warburg Pincus, KKR India Advisors Ltd, True North Managers LLP, Bain Capital Advisors (India) Pvt. Ltd, Temasek and Blackstone. Strategic investors such as Kotak Mahindra Bank, RBL Bank and HDFC Ltd were also in the race to pick up the stake.
Last month, The Times of India had reported that housing loan major HDFC Ltd was the frontrunner to acquire Canara Bank’s stake in CanFin. Subsequently, The Economic Times reported that alternative asset management firm Baring Private Equity Asia had pipped HDFC to emerge as the favourite.
According to one person close to the development, the bank was expecting a 10-15% premium on its current price-to-book value. A January 2018 Edelweiss research report haad pegged Fin Can’s 2016-17 price-to-book value at 5.5 times. However, the offer was for around 4 times its P/B.
In March 2017, Singapore’s sovereign wealth fund, GIC Pte. Ltd, had bought a 13.45% stake in Can Fin Homes from Canara Bank for Rs 753.77 crore ($113 million).
Canara Bank had then said that the deal was part of a plan to sell its non-core assets. Following the news, Can Fin shares tanked 11.30% during Monday’s trade.