HDFC AMC gets RBI approval to raise stakes in five pvt banks
MUMBAI : HDFC Asset Management Co. Ltd, or HDFC AMC, has secured the Reserve Bank of India’s (RBI’s) approval to raise its stake to 9.5% in five private lenders, signalling growing investor interest in private lenders and a potential bullish trend. India’s third-largest asset manager was granted regulatory approval to raise stakes in Karur Vysya Bank Ltd, DCB Bank Ltd, Equitas Small Finance Bank Ltd, Federal Bank Ltd, and City Union Bank, the lenders said in separate exchange fillings.
“Taking RBI permission is part of a well-followed procedure by bank-sponsored AMCs and others before crossing the 5% shareholding mark, as getting approval is a time-consuming affair," an HDFC AMC official said on condition of anonymity. “If the banks concerned come up with a QIP (qualified institutional placement) or a block deal, it is not possible to acquire more. That said, getting permission doesn’t automatically imply that we will increase our existing stake," the official said.
At Thursday’s closing prices, a 9.5% stake in each of the five banks will cost a total of ₹6,461 crore. Sustained credit growth and improving profitability have made bank stocks an attractive investment option for fund managers amid robust inflows into mutual funds. Over the past three months, Karur Vysya Bank has gained 9.23%, DCB Bank 6.28%, City Union 3.4%, and Federal Bank 18.1%.
Equitas Small Finance is an exception, with a loss of 2.1% over the past three months. Ajay Bodke, director of Padigree Advisory Pvt. Ltd, said considering the pace of growth in assets under management (AUM), mutual funds (MFs) need more headroom to add to their exposure.
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