Cash-rich Piramal keen on buying stake in Axis Bank

FP Staff Jan 27, 2014 

Ajay Piramal-promoted Piramal Enterprise, which last month raked in Rs 8,900 crore by selling a 10 percent stake in Vodafone, is now  looking at a proposal from investment bankers to pick up around 5 percent equity stake in private sector lender Axis Bank from Specified Undertaking of Unit Trust of India (SUUTI), the Business Standardreported today quoting unknown sources.

The Piramal Group is sitting on a massive cash pile. it had sold  its domestic formulation business to Abbott Laboratories for around Rs 18,000 in 2010.

As per  Axis' market capitalisation of Rs 56,640 crore,  the value of a five percent stake is around Rs 2,800 crore. This stake buy in Axis Bank would give Piramal exposure  to banking sector without getting tied to its regulatory norms.

Last week,  Specified Undertaking of Unit Trust of India (SUUTI) chose JPMorgan Chase & Co, Citigroup Inc and JM Financial to help sell its 23.58 per cent stake in Axis Bank valued over Rs 13,000 crore.

The sale is part of a search for funds to narrow the government's fiscal deficit to 4.8 percent of gross domestic product in the financial year ending March 2014 from 4.9 per cent a year earlier.

Govt allows Axis Bank to raise foreign equity to 62%

BS Reporter  |  New Delhi  

December 27, 2013 Last Updated at 00:47 IST

Mayaram says govt yet to decide on SUUTI's stake sale proposal

With the Cabinet Committee on Economic Affairs (CCEA) clearing Axis Bank’s proposal  to increase its foreign equity to 62 per cent from the present 49 per cent, this will allow the private sector lender to bring in Rs 7,500 crore through this mode.

Any proposal involving foreign direct investment (FDI) above Rs 1,200 crore is cleared by CCEA. Axis, third largest private lender in India, sought a raising of the foreign equity limit after the Reserve Bank (RBI) banned fresh purchases by foreign investors on reaching the sanctioned limit of 49 per cent.

Foreign shareholding in private sector banks is allowed up to 74 per cent of the paid-up voting equity capital. Up to 49 per cent is allowed under the automatic route; for increasing up to 74 per cent, the government’s approval is required.

 

In October, an older generation private lender, Federal Bank, also got the government nod for an increase in the foreign investment limit in its equity, to 74 per cent from 49 per cent. Axis shares rose after the announcement and ended the day at Rs 1,298.20 or 1.2 per cent higher than its previous close, while the broader indices were flat. Arvind Mayaram, the government’s economic affairs secretary, said the government was considering selling the stake in Axis of the Specified Undertaking of the Unit Trust of India (SUUTI) but was yet to decide, news agencies reported. The government has 20.7 per cent stake in Axis via SUUTI.

The foreign shareholding in Axis, as on June 30, was 48.96 per cent. This includes investment through the FDI route in the form of global depository receipts of 8.08 per cent and other foreign holdings, including those of foreign institutional investors (FIIs), of 40.88 per cent.

 

The higher cap on foreign investment will allow tapping of foreign funds. However, due uncertainties in the global financial world, banks did not raise any money through American or global depository receipts in 2012-13.

RBI says banks tend to raise more funds through private placement than public issues. In 2012-13, private banks raised about Rs 17,000 crore through private placement as compared to Rs 6,200 crore the previous year. The number of issuances in the last financial year was also higher at 21 as compared to 11  the previous year. 

Earlier this month, HDFC Bank – the country’s second largest private sector lender – applied to the Foreign Investment Promotion Board for a rise in foreign investment in its equity to 74 per cent, after the foreign shareholding in the bank (FII and FDI) exceeded 49 per cent. RBI, on December 16, barred sale of its shares to FIIs after the 49 per cent ceiling was reached.

RBI bans FIIs from buying shares in Axis Bank

By IRIS

16th August 2013 05:18 PM

The Reserve Bank of India (RBI)announced today that foreign share holding by Foreign Institutional Investors (FIIs) in Axis Bank has crossed the overall limit of 49% of its paid-up capital.

Therefore, no further purchases of share of this bank would be allowed through stock exchanges in India on behalf of FIIs.Shares of the company declined Rs 14.45, or 1.35%, to settle at Rs 1,055.40. The total volume of shares traded was 341,008 at the BSE (Friday).

Axis Bank launches e-Gift card

BS :Tania Jaleel / Mumbai Dec 17, 2012, 16:12 IST

Customers can purchase these using their credit or debit cards

Axis Bank today launched its e-Gift card, making it the first Indian bank to do so.

 The facility of e- Gift Card can be availed at www.gogiftacard.com where a customer can buy and send a card of their choice by either e-mailing it or sending it via SMS to the person they want to send the gift card to.

Customers can purchase these online e- Gift Cards using their credit or debit card issued by their respective bank. 

All purchase transactions shall be limited to sites that support verified by Visa and MasterCard Secure Code for two factor authentication.

 The validity of the card is 1 year from the date of issuance.