Catholic Syrian Bank charts listing route
The Catholic Syrian Bank (CSB), a Thrissur-based lender, is planning to list this year to comply with a Reserve Bank of India (RBI) norm.
The private sector bank is looking at a direct listing or alternatively an initial public offering (IPO), Bloomberg quoting its CEO C.V.R. Rajendran said.
CSB is understood to have appointed Axis Capital to manage the listing.
CSB, backed by Canadian investor Prem Watsa’s Fairfax, is looking at two methods to list its shares on the bourses — direct listing where all the shares become tradable without the need of an IPO or alternatively, a new issue offering if the direct listing does not find favour with the Securities and Exchange Board of India (Sebi).
“In February 2018, Fairfax agreed to invest approximately $168 million for a 51 per cent equity ownership in the Catholic Syrian Bank (CSB). We completed an initial closing of the transaction (in October), investing $60 million in equity shares and warrants, resulting in an equity interest of 19.7 per cent.
“The remaining consideration is payable within 18 months, upon which our ownership will go to 51 per cent on a fully diluted basis,” Fairfax said in its annual report for 2018.
This was the first time the Reserve Bank of India (RBI) allowed a foreign firm to take a majority interest in a local lender.
At the same time, the RBI told privately-held Catholic Syrian Bank that it should list its shares before September 30, 2019.
“After Fairfax India’s investment in CSB, Rajendran has put together a strategic direction for CSB, focusing on profitability, productivity, efficiency and asset quality.
“He has set the goals that CSB will strive to achieve over the next five years: return on assets of 1.5 per cent, return on equity of 18 per cent, net interest margin of 3.9 per cent, revenue per employee of Rs 4 million, cost to income ratio of 46 per cent and net non performing assets (NPAs) of 1.1 per cent,’’ Fairfax added.
For the third quarter ended December 31, 2018, CSB posted a net profit of Rs 74 lakh.
Catholic Syrian Bank has hired Axis Capital Ltd to manage the listing, and is debating exactly which route to market it will take, Rajendran said in a recent interview. He said he’s seeking approval from the Securities and Exchange Board of India for a direct listing — where all existing shares become tradable without the need for an IPO. But if the bank doesn’t get the nod from Sebi, he will instead pursue an IPO that may involve the sale of both new and existing shares, Rajendran added. (Mumbai)