The investment company of Abu Dhabi’s national security adviser and deputy ruler Sheikh Tahnoon bin Zayed al-Nahyan, IHC, is among those in early-stage discussions to buy into the promoter of Bandhan Bank, Bandhan Financial Services (BFSL), which owns a little more than a third of the private lender, said people aware of the development. The move is aimed at giving early stage financial investors an opportunity to sell stakes.

BFSL has two subsidiaries–Bandhan Technologies, an IT services and AI-led technology company, and Bandhan Financial Holdings, the holding company of Bandhan Bank, Bandhan AMC, Bandhan Mutual Fund Trustee, Bandhan Investment Managers (Mauritius) and Bandhan Life Insurance.

BFSL, led by Bandhan founder Chandra Shekhar Ghosh, has been working with advisers Jefferies to find strategic investors for 25-32%.

That will open up an exit option for GIC of Singapore and the International Finance Corporation (IFC), backers of the firm for more than a decade. Together, these two held 30.3% of BFSL at the end of March, and have been seeking a full or partial exit. Their stake alone could be worth $500-600 million, says the report by ET.

Other investors include Small Industries Development Bank of India (Sidbi), which owns 8.1%. Financial Inclusion Trust and North East Financial Inclusion Trust own a total 40.7%. The Bandhan Employees’ Welfare Trust holds 14.6%. If other shareholders also choose to exit, it will lead to a much larger transaction.

As of March 31, BFSL owned 59.98% of Bandhan AMC and 97.16% of Bandhan Life Insurance Co. Singapore’s GIC and Chrys Capital are other investors in the asset management firm.

Bandhan Financial Holdings Ltd had a stake of 37.5% in the bank at the end of June. As per the bank’s licensing agreement with the Reserve Bank of India, it must reduce the stake to 26% by 2030.

Banks and sovereign funds have been widely canvassed in the Gulf for a stake in BFSL.

“Bandhan underscored that the growth cut was pre-emptive and that on the ground, asset-quality trends remain benign, including improving delinquency trends in both newer as well as older vintages, with the credit cost guidance retained at 1.6-1.8%,” said Anuj Singla and Harsh Wardhan Modi, analysts at JP Morgan. “Guidance cut was the key focus.”

Having started out as a microfinance lender in 2001, Bandhan became a full-fledged private sector bank in August 2015. The total loan book of the bank stands at Rs 1.56 lakh crore with total deposits of Rs 1.65 lakh crore. – editor@nrifocus.com