Multiples Alternate Asset Management has picked up over 5 per cent stake in the recently closed qualified institutional placement (QIP) of South Indian Bank, where the old generation bank has raised Rs 443 crore. The QIP has also seen participation from The Carlyle Group, which started picking up stake in the Thrissur-based bank in May this year.
South Indian Bank launched its share sale on September 3, and has sold 200 million shares or nearly 15 per cent stake at Rs 22.13 apiece to investors. The QIP has been subscribed by eight investors, which also include IFCI Ltd and SBI Magnum Sector Fund.
The shares of South Indian Bank closed at Rs 21.65, up by 0.23 per cent on Friday at BSE.
Old generation private sector banks have attracted significant PE interest since last year, with nearly one-and-a-half dozen funds taking exposure to them.
Multiples, floated by former ICICI Venture CEO Renuka Ramnath, is picking up 5.58 per cent stake for little over Rs 165 crore ($30 million). The firm is picking up the stake through two entities, one registered as FII and other as venture capital fund.
Multiples had earlier looked at buying stake along with a consortium in Dhanlaxmi Bank, but the deal was called off.
This will be its second deal in financial services sector this year after it picked up stake Chennai-based Cholamandalam Investment and Finance for Rs 106 crore in January. Other investments include Dehradun-based Sara Sae Pvt Ltd and Indian Energy Exchange Ltd (the country’s largest power trading exchange).
Carlyle has increased its exposure to South Indian Bank with QIP, increasing its stake to 4.72 per cent. In the QIP it has picked up 1.56 per cent stake for Rs 60 crore ($11 million). Carlyle total investment in South Indian Bank would stand at Rs 150-170 crore with the latest round, according to VCCircle estimates.
Last year, Carlyle had also picked up stake in Edelweiss Financial Services and India Infoline through bulk deals.
IFCI also picked up 4.98 per cent stake for Rs 147 crore, while other investors were SBI Life Insurance (Rs 20 crore), SBI Magnum Fund (Rs 25 crore), Axis Bank (Rs 15 crore) and State Bank of India (Rs 10 crore).
JP Morgan, SBI Capital Markets, Enam Securities and JM Financial were the advisors on the share sale.
South Indian Bank reported 29 per cent increase in net interest income to Rs 1,021 crore with the net profit up 37 per cent to Rs 402 crore in FY12. For Q1FY13, it reported a 45 per cent growth in NII to Rs 297 crore with profit after tax up 49 per cent to Rs 123 crore.
With 56 per cent of its branches in Kerala, it has a network of over 706 branches and over 700 ATMs.
"We like the bank for its strong regional presence, good technology network, and possible M&A play. South Indian Bank generates decent margins on the back of its structurally strong deposit franchise. It offers an attractive play on robust loan growth, improving asset quality, and consolidation in the Indian banking space," said an Edelweiss Capital report on the bank.