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Catholic Syrian Bank weighs fundraising options as talks with Fairfax collapse

LiveMint logoLiveMint 24-07-2017 Gopika Gopakumar

Mumbai: The board of Catholic Syrian Bank (CSB) met on Monday to discuss various capital raising plans of the bank after talks with Prem Watsa-owned Fairfax Holdings collapsed owing to valuation differences, said three people who attended the meeting.

“The board is currently weighing three options: whether to revive the IPO (initial public offering) plan or to sell 5% stake to multiple investors or go ahead with a strategic stake sale of 51%,” said T.S. Anantharaman, chairman of the Kerala-based bank and one of the three cited earlier.

“We will be taking a decision very soon,” he added.

Mint had reported on 13 July that the bank was reconsidering a share sale, three years after it had filed a draft red herring prospectus to raise Rs400 crore.

In June 2015, markets regulator Securities and Exchange Board of India (Sebi) had approved its public offering.

The plan was, however, dropped because of volatile market conditions prevailing at that time.

“We need to raise capital which will meet the requirement for the next three years,” said the second of the three people cited earlier, on condition of anonymity.

At the end of March, Catholic Syrian had a capital adequacy ratio of 12.15%, higher than the 10.25% mandated by Basel-III norms.

But the company needs to beef up its capital position to grow its loan book at a faster rate than the 3.4% seen in fiscal 2016-17.

“Reserve Bank of India (RBI) has pushed us to consider the option of listing as we are one of the two unlisted banks in the country. We are therefore in the process of appointing a merchant banker who will help us take a decision on the capital raising plans in the next one week,” this person added.

An RBI spokesperson did not respond to an email seeking comment.

Another option for the bank to quickly raise capital is to sell a smaller stake to investores. Various private equity and strategic investors have shown interest in the bank.

In May, Business Standard had reported that Aion Capital, JM Financial and the Everstone-backed IndoStar Capital had shown interest in acquiring a stake in the bank.

Catholic Syrian Bank reported two years of losses before showing a profit of Rs1.5 crore in fiscal year 2016-17.

Its gross non-performing assets (NPAs) had increased to 7.25% of advances at the end of March 2017 against 5.62% a year earlier.

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