Billionaire brothers Malvinder and Shivinder Singh have sold around 8 per cent stake in their financial services holding firm Religare Enterprises for an estimated Rs 421 crore over the last two weeks. Part of this was lapped up by US-based Customers Bancorp which recently committed $51 million into the public-listed company.
The promoters are selling the shares as part of their 22 per cent stake divestment to bring down their shareholding to 49 per cent to qualify Religare Enterprises to set up an NOFHC as per RBI guidelines to apply for a banking licence.
Singh brothers held over 71 per cent in Religare Enterprises as of June 30 and had been selling shares since early this month.
On Thursday they sold another large chunk worth Rs 320 crore through the open market, part of which was acquired by CB Green Ventures Pte for Rs 139 crore ($22 million). The rest of the shares were picked by some other financial institutions. The deal was negotiated/brokered through Axis Capital.
Earlier, Customers Bancorp had said it will buy stake in Religare Enterprises through a split between share purchase from the promoters as well as a preferential allotment of shares and convertible warrants. It had said it will buy stake worth $22 million from the promoters, invest $28 million through subscription of equity convertible warrants and share issue worth $1 million.
Customers Bancorp, a US banking services firm, is backed and led by Jay Sidhu, a US-based banker of Indian origin. For Sidhu, who led the rise of Sovereign Bancorp into one of the largest US regional banks before being ousted from the organisation, this is the second attempt to enter Indian financial services business.
Two years ago Customers Bancorp was among the investors who proposed to invest in Dhanlaxmi Bank. However, the deal was later scrapped.
NASDAQ-listed Customers Bancorp had not disclosed the quantum of stake that it will be picking in Religare Enterprises but is expected to get around 6 per cent stake of the diluted equity capital of the Indian firm.
Religare Enterprises’ scrip rose 1.14 per cent to close at Rs 351.6 a share on the BSE in a weak Mumbai market on Friday.
With the share sale, promoters’ holding has shrunk to around 63 per cent which will dilute further to around 61.7 per cent post preferential allotment to Customers Bancorp and conversion of warrants into equity, as per VCCircle estimates.
This means Singh brothers need to sell further shares worth around Rs 700 crore to meet their target of 49 per cent holding.
(Edited by Joby Puthuparampil Johnson)