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Tayals seek better BoR valuation

Mumbai, May 22 (PTI): The Tayals of Bank of Rajasthan (BoR) have asked their suitor — ICICI Bank — to sweeten the merger deal to a level that would value the Udaipur-based bank at Rs 4,500 crore. The promoters are not happy with the internal valuation arrived at by ICICI that put BoR’s worth at around Rs 3,040 crore.

“They (ICICI Bank) have got a lottery. I believe that it is a (good) deal for them. We are definitely looking for a better valuation. It should be a minimum 1:3,” BoR promoter P.K. Tayal told PTI.

The boards of ICICI Bank and BoR will meet tomorrow to decide on the share-swap ratio for the merger of the two entities.

ICICI Bank had said it would offer 25 shares for every 118 shares of BoR (a swap ratio of 1:4.72) held by the Tayal family, but added that this was subject to necessary approvals.

The 1:3 share ratio sought by the Tayals would entitle them to 2.9 crore ICICI Bank shares worth Rs 2,418 crore. According to the share-swap ratio worked out by ICICI, the Tayals will receive 1.88 crore ICICI Bank shares. The Tayals claim to hold only 28.6 per cent in the bank but Sebi says they own 8.88 crore BoR shares.

The two banks agreed to merge last Tuesday and appointed accountancy firm Harbhakti & Co to assess the value of BoR.

According to a senior BoR official, the bank’s board is likely to argue for a better valuation at tomorrow’s meeting and also discuss issues such as safeguarding the interests of its 30 lakh customers and nearly 4,000 employees.

“Improving the valuation from what has been offered by the bank will definitely come up in the board meeting tomorrow. Also, the board is keen that the interests of its customers and staff are protected,” the official said on the condition of anonymity.

Meanwhile, the commerce and industry ministry said ICICI Bank would need government clearance for the merger. “It is obvious that they (ICICI Bank) will have to take the approval of the Foreign Investment Promotion Board (FIPB) as they are a foreign bank,” sources in the commerce ministry said.

They said ICICI Bank would also have to obtain regulatory clearances from the Reserve Bank of India and the Securities and Exchange Board of India. For foreign investment approval, ICICI can directly approach the FIPB, or the RBI can refer the case to the government.

Under the new foreign investment guidelines, ICICI Bank is a foreign-owned, Indian-controlled bank as the overseas equity is over 65 per cent. ICICI Bank had last acquired Sangli Bank of Maharashtra.

BoR has 463 branches across the country, while ICICI has about 2,500. Post-merger, the total business of ICICI Bank will cross Rs 4 lakh crore.

Sebi had recently banned around 100 entities, including the Tayal group firms, from accessing the stock market, accusing the promoters of fraudulently hiking their holding in the bank. The RBI also imposed a a Rs 25-lakh fine on BoR for alleged violation of various norms, including misrepresentation of documents, KYC norms and handling of a particular corporate account.

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