IndusInd Bank promoters IndusInd International Holdings Ltd (IIHL) have converted warrants in the bank at a 60% premium to Tuesday’s closing price investing Rs 2,021 crore, putting to rest doubts on whether the Hinduja-backed company had the financial muscle to keep capitalising its crown jewel. The investment was done by pledging a portion of the bank’s shares with banks making investors wary, but the Hindujas said it was more due to technical holding requirements rather than the financial strength of the business family.
In an interview with ET, Ashok P Hinduja, chairman IIHL, said the Hinduja brothers’ don’t intend to sell a single share and would keep pursuing their interest to raise their family holding to at least a quarter of the bank, he said. “We have never sold a single share in 26 years. In fact, in the last four years, we have raised $450 million and invested all that money into the bank. We have maintained our stake at 15% and have asked the RBI to allow us to increase it to 26%,” Hinduja said.
On Tuesday, promoter entities IndusInd Ltd and IIHL had said that they have pledged 42.7 million shares, or 5.6% of the equity, with Catalyst Trusteeship Ltd, in a stock exchange filing. Hinduja said the pledge of the bank’s shares is a stop-gap arrangement. IndusInd shares ended at Rs 1,033 apiece on the BSE, down 2.46%.
“Regulations do not allow us to hold more than 10% in IIHL. We cannot even give a loan to this company which can be used to invest in the bank. So, how do we infuse capital? There are more than 600 shareholders from 34 different countries in the company from across the world and legal clearances from each of them took time because of challenges linked to Covid,” Hinduja said when asked about the two extensions the company got to convert its warrants.
IIHL has pledged the shares with Deutsche Bank and Barclays to raise funds for converting the warrants. Hinduja declined to share the details of the loans. As the group tries to overcome the complexities involved in the holding company, it plans to list IIHL in one of the international markets so that more than 600 shareholders from 34 different countries have a route to monetise or exit their ownership of IndusInd Bank.
“From the point of view of RBI’s fit and proper criteria for well-regulated entities, it will help to have a listed company with diversified shareholding. Also, as new shareholders come, the proportionate shareholding of existing shareholders will come down depending on how much stake we dilute,” Hinduja said. IIHL plans to list in September, likely in Mauritius. A decision will be made in April.
Credit: Stocks-Markets-Economic Times