PRIVATE EQUITY | Cesar Tordesillas, India

South Indian Bank sells 15% stake to US private equity firm

South Indian Bank has sold 15% stake for Rs 443 crore to the private equity firm of the US-based Carlyle Group, First Carlyle Ventures Mauritius.

The latter picked up a 2.04% stake by paying Rs 22.13 per share in a qualified institutional placement, which saw IFCI, State Bank of India and investment advisory firm Multiples Alternate Asset Management buying shares in the Kerala-based private lender, which is planning to use the fund to grow advances by 20-25% this fiscal.

IFCI has picked a 4.99% stake for Rs 147.5 crore, while Multiples' two private equity funds have separately invested a total of Rs 165 crore for a 5.8% holding between them.

State Bank of India picked up 0.34% for Rs 10 crore, while SBI Life Insurance bought 0.67% for around Rs 20 crore and SBI Mutual Fund 0.85% for Rs 25 crore

The bank has accepted investments at the floor price for the issue, which was 14% lower than the minimum price it sought in March when it was looking to raise Rs 1,000 crore. But the bank had scrapped the plan then as many domestic investors were not ready to pay a premium over the floor price of Rs 25.60, fixed then by the Securities & Exchange Board of India. It later decided to curtail the capital raising plan to Rs 400-500 crore.

"The fresh infusion will take care of the fund requirement for the next two years," said South Indian Bank managing director & chief executive VA Joseph.

The fresh capital infusion will enhance the bank's paid-up capital to Rs 133.5 crore from Rs 113 crore and capital adequacy ratio to about 15% from 13.76% as of June.

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