Customers Bancorp to buy 6% stake in Religare for $51 mn
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Customers Bancorp to buy 6% stake in Religare for $51 mn

Last Updated: Wednesday, June 26, 2013, 22:12
 
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Customers Bancorp to buy 6% stake in Religare for $51 mn
New Delhi: Financial service provider Religare Enterprises Ltd Wednesday said Customers Bancorp Inc of USA has agreed to pick up 6 percent stake in the Delhi based banking aspirant for USD 51 million (about Rs 300 crore).

The multi-structured deal is part of Religare's attempt to enter the banking fray, under which the promoters have to bring down their stake to under 49 percent, the company said.

The promoters are selling the shares as part of their 22 percent divestment to qualify REL to setup NOFHC as per RBI guidelines for licencing of new banks in the private sector issued on February 22, 2013.

Last week, REL promoters billionaire brothers Malvinder Mohan Singh and Shivinder Mohan Singh decided to sell nearly 22.75 percent stake, worth about Rs 1,000 crore, to meet the RBI eligibility norms for new banks.

The US lender will pick up the stake in Religare through a combination of primary and secondary market investment, financial services firm said in a statement.

This transaction would be done as per applicable law at prevailing market price on date of purchase, it said.

Management teams of both the companies have negotiated a term sheet based on which definitive documents are to be completed. The board of the bank has already given its approval to proceed with the transaction, it said.

These teams will also enter into a business alliance agreement to find opportunities to service Religare's customers across businesses, as well as potential customers Customers Bancorp of Indian origin in the US for their India investment needs, it added.

As per the agreement, Customers Bancorp would make a secondary purchase of Indian Rupee equivalent of USD 22 million of shares of REL from the promoters.

Wyomissing, Pennsylvania-based Customers Bancorp, which is a full-service bank

In addition, it said Customers Bancorp would make an investment for the Indian Rupee equivalent of USD 28 million in share Warrants issued by the company on preferential allotment basis, as per SEBI floor price.

These warrants would be convertible into equity shares in maximum of 18 months, it added.

The US lender would also subscribe to common equity shares for the Indian Rupee equivalent of USD 1 million on a preferential allotment basis, as per applicable law, it said.

"Customers Bancorp management team expertise in global banking will be extremely supportive in our banking foray. We are confident that the proposed association will further strengthen our endeavour to create a distinctive and diversified financial services conglomerate that believes in the Indian market’s long term growth potential," REL Chairman and Managing Director Sunil Godhwani said.

Jay Sidhu, Chairman and Chief Executive Officer, Customers Bancorp Inc, said "...Our management team's extensive banking experience will be available to Religare in its banking foray. We feel comfortable with the growth prospects of Religare and look forward to a long term relationship with the company."

PTI


First Published: Wednesday, June 26, 2013, 22:12


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