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May 24, 2001
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Money > Business Headlines > Report May 24, 2001 |
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Nedungadi Bank shelves plan to divest 20 per centBaburajan K & George Smith Alexander Nedungadi Bank has shelved its plans to offer a 20 per cent equity stake to a strategic investor. Merchant banking sources said the response from strategic investors has not been encouraging owing to the prevailing market conditions and the recent controversies which prompted the Reserve Bank of India to remove the bank's chairman A R Moorthy. A senior bank official said the bank was not going ahead with the strategic placement. "The plan to offer stake to some investor was a vision of the former chairman AR Moorthy," he said. Nedungadi Bank had earlier planned to rope in an insurance company as a partner with a 20 per cent stake and use its expertise to foray into insurance. The bank had proposed to sell risk products to its customers in partnership with the insurance firm. Some leading brokers have around 41 per cent stake in the bank, with at least two identified groups of brokers -- led by Rajendra Banthia and Shrikant Mantri -- holding 21 per cent. The paid-up capital of the bank is Rs 102 million. The bank was keen on beefing up its presence in banking and insurance segments. In January, Moorthy said that though the board was yet to take decision on the strategic partner, it had appointed an agency (merchant banker) to finalise the deal. The bank is at present run by a group of directors who look after its day-to-day affairs. The bank had given around Rs 950 million in January to March 2000 to three companies fronted by the brokers---- First Custodian Fund India, Harvest Deal Securities and Messers Srikant G Mantri. Of this, the bank has received Rs 750 million from the first two entities. There is an outstanding interest amount of Rs 80 million from these companies which have also not been paid up by the brokers. Powered by YOU MAY ALSO WANT TO READ:
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