A number of venture investors and startups have shown interest in acquiring a stake in Nainital Bank, a subsidiary of Bank of Baroda. Premji Invest and stockbroking giant Zerodha are among the prospective backers that have engaged in conversations with Bank of Baroda regarding the acquisition, according to sources familiar with the matter.
Key Takeaway
Premji Invest and Zerodha are potential investors in the acquisition of a stake in Nainital Bank, a subsidiary of Bank of Baroda. Bank of Baroda aims to initially divest about 40 to 50% stake in Nainital Bank and eventually sell the remaining shares. The negotiations are at a serious stage, although a deal has not been reached yet.
Bank of Baroda, the second largest PSU (Public Sector Undertaking) bank in India, plans to divest a significant stake in Nainital Bank, in compliance with the regulator’s directive. The bank, which currently owns over 98% stake in Nainital Bank, aims to initially divest approximately 40 to 50% stake in the subsidiary, with the intention of eventually selling the remaining shares.
Interest from Multiple Entities and Consortium Bid
The talks between Bank of Baroda and potential investors, such as Premji Invest, Zerodha, and private equity firm Multiples, have recently reached serious deliberations. The bank is reportedly engaging with a consortium of multiple entities, and it is likely that the winning bid will be awarded to this consortium.
It is important to note that no deal has been reached as of yet, and there is still a possibility that the existing prospective investors may not proceed with the investment, as cautioned by people familiar with the situation.
Investment Trends in Banking Sector
The investment discussions with Nainital Bank come at a time when the Reserve Bank of India is considering permitting external investors in select banks. This move is seen as a sign of growing interest from venture capitalists and private equity firms in the banking sector.
According to anonymous sources, venture capitalists and private equity firms are exploring investment opportunities in banks as a hedge against their fintech investments. Regulatory scrutiny on younger financial services firms has increased, leading investors to seek more established and regulated banking institutions.
