Axis Bank plans to sell NBFC business for up to $1 billion

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Subscribe to enjoy similar stories. In a bid to be in line with proposed Reserve Bank of India (RBI) norms regarding business overlaps and holding limits of banks in their subsidiaries, Axis Bank Ltd has begun exploring a possible sale of Axis Finance Ltd, two persons familiar with the development said on the condition of anonymity. Further, the two people added that a planned public listing of Axis Finance has been set aside in favour of a private selloff because of potential higher valuations.

Axis Bank, India’s third largest private lender, is looking at a valuation of around $1 billion for its wholly owned NBFC (non-banking finance company) subsidiary, the people said. Investment bank Morgan Stanley has been tasked to find a buyer for Axis Finance, these people added. The bank may sell off 80-100% of its ownership in the non-bank lender if a suitor offers a premium for acquisition of control, said the first person.

Also read | RBI pulls up Axis Bank over contests to generate business On 20 August, Mint reported that Axis Bank may bring a strategic investor for Axis Finance or even consider a public listing of the non-banking subsidiary. RBI draft norms say that scheduled commercial banks must curtail stakes in all subsidiaries, including NBFCs, to 20% or below within two years. Another RBI proposal says multiple group entities within a bank would not be allowed to conduct similar business and there should be no overlap of lending business between banks and group entities.