Dubai-based NRI Yusuffali MA increases stake in Federal Bank to close to 5%

Yusuffali M A, a Dubai-based NRI businessman and the founder of the $5.1 billion Lulu Group which runs one of the biggest retail chains in Asia, has increased his stake in the Kerala-based Federal Bank to 4.47 per cent, marking his interest in the financial services space in India. The NRI businessman purchased the stake from Dubai-based Emirates Financial Services, a subsidiary of Emirates NBD, the largest banking group in the Middle East in terms of assets. As on June 30, 2013, Yusuffali held 3.69 per cent in Federal Bank.

Three months ago, Yusuffali cornered a 4.99 per cent stake in the 93-year-old Thrissur, Kerala-based Catholic Syrian Bank (CSB). Following these stake purchases, the two Kerala-based banks will have the maximum stake held by individual non-residents among all banks in India. NRIs from Kerala significantly contribute to the deposit base of both Federal Bank and CSB.

As on March 31, 2012, individual non-residents held 18.2 per cent stake in CSB, followed by Dhanlaxmi Bank Ltd with 6 per cent and Federal Bank with 3.5 per cent. However, Yusuffali’s recent stake purchase would increase stake held by individual non-residents in Federal Bank.

A senior banker associated with CSB, who did not wish to be named, said Surachan Chawla, a Thailand-based NRI who is the largest shareholder in the bank, now holds a little over a 10 per cent stake in the bank. Other shareholders in CSB include Edelweiss Financial Services Ltd, AIF Capital India Pvt Ltd and Federal Bank.

Federal Bank is backed by ChrysCapital, International Finance Corporation and Standard Chartered Private Equity Advisory India Pvt Ltd.

Yusuffali is the managing director of Emke Group, a Gulf-based retail and leisure conglomerate operating under the flagship brand Lulu. Headquartered in Abu Dhabi, the group has diversified into many areas such as manufacturing, food processing and hospitality with retail being the prominent among them.

Besides increasing his stakes in these banks, Yusuffali is betting on the remittance business through Lulu Forex, owned and operated by LuLu International Exchange LLC.

The government’s efforts to increase banking penetration along with a weak rupee has led to a renewed interest in the financial services space by NRIs, said a senior banker with Federal Bank who did not wish to be identified.

City Union Bank is another bank where NRIs increased stake in the recent past—NRIs’ stake in the bank rose to 2.9 per cent in March 2012 from 0.5 per cent in the year-ago period.

(Edited by Joby Puthuparampil Johnson)

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