KOCHI: Federal Bank has decided to sell 59 lakh equity shares more in Equirus Capital Pvt Ltd ECPL, a move that follows the earlier sale of 11.50 lakh shares during the current financial year itself.
With this, the bank will be selling a total of 70.50 lakh shares, representing 9.81 per cent holding in ECPL’s paid-up equity share capital on a fully diluted basis. However, it’s not clear how much stake Federal Bank will be left with following the new move.
There were reports a few years ago that stated Federal Bank had acquired 26 per cent stake in ECPL. The bank has said that upon the completion of the sale mentioned earlier, ECPL will no longer be classified as an Associate of the Bank.
Amicus Capital invests in Equirus Group
In the meatime, Private equity firm Amicus Capital on Friday announced that it has invested Rs125 crore in Equirus Group, a late Rakesh Jhunjunwala-backed financial services firm, for an undisclosed stake.
The investment is a combination of primary and secondary purchase of sales, even as the private sector lender Federal Bank having taken a partial exit.
The new investors include Kishor Patil, Ajai Kumar, N Sivaraman, Yagnesh Dosshi, Krishna Jha, Anand Archak, Abhishek Goyal, Badri Mohapatra, Shankar Valiya and Deepak Singhal, it said.
Details of stake sale
The total consideration for the 59 lakh shares Federal Bank sold in ECPL is expected to be Rs64.90 crore, based on a price of Rs110 per share. Combined with the previous sale, the total proceeds from the sale of 70.50 lakh shares during the current financial year amount to Rs77.55 crore.
The buyers of the shares include Geeta Penumetsa, Dr Ajai Kumar, Transaction Square LLP (represented by Girish Vanvari), N Sivaraman (a board member of ECPL), and Amicus Capital Partners India Fund II. None of the buyers belong to Federal Bank’s promoter group or related entities, signaling a diversified buyer base for the transaction.
Strategic implications
The divestment reduces the bank’s exposure to ECPL, which contributed a modest 0.87 per cent to the bank’s consolidated total revenue of Rs26,781.95 crore for the year ended March 31, 2024. ECPL’s net worth as of March 31, 2024, stood at Rs157.01 crore, contributing 0.52 per cent to the bank’s consolidated net assets.
“This move aligns with the bank’s strategy of optimising its portfolio and focusing on core banking operations, while also allowing ECPL to operate independently without the bank’s involvement,” the bank noted.
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