 "Prem Watsa, Fairfax")
Prem Watsa-promoted Fairfax Financial Holdings has withdrawn its proposal to invest Rs 1,000 crore in buying a 51 per cent stake in the Kerala-based Catholic Syrian Bank (CSB).
With the deal called off, the bank might have to find another investor, sources said. CSB would need to seek approval from regulators and finalise a valuation, which would take several months, they added.
“We have not heard anything specifically from Fairfax. The valuation has been a concern between the parties, but work is in progress,” CSB Chairman TS Anantharaman said. Sources in the bank, however, confirmed that the deal had been called off.
Fairfax last year received approval from the Reserve Bank of India (RBI) to buy up to 51 per cent in CSB, and it was planning to commit an investment of Rs 1,000 crore. The bank has submitted its valuation report to the RBI.
Sources said Fairfax offered Rs 95 per share but the bank was seeking Rs 180-200 per share. Fairfax also would not be able sell the stake for five years, sources said, adding it would not have been a viable option at the price being sought.
Sources said at least two CSB board members were keen on pushing the price to Rs 200 per share.
It may be difficult for CSB to find another investor willing to invest such a large amount in one deal. Further, delays in regulatory clearances will cost the bank time. The new investor might also not agree to the price the CSB board expected, a person close to the development said.
"Fairfax would have been a great addition to the shareholders’ list. Any new investor will take at least three to six months to find, and the bank should protect itself during this period," said S Santhanakrishnan, former chairman of CSB.
Investment banker Vallabh Bhanshali, has bought a 4 per cent stake in the bank from the Thailand-based Chansri Chawla family at Rs 160 a share.
CSB reported a net profit of Rs 1.55 crore in 2016-17 against a loss of Rs 149.72 crore a year ago. The bank has cleaned up its books through write-offs, rationalising of branches and other initiatives.
With the deal called off, the bank might have to find another investor, sources said. CSB would need to seek approval from regulators and finalise a valuation, which would take several months, they added.
“We have not heard anything specifically from Fairfax. The valuation has been a concern between the parties, but work is in progress,” CSB Chairman TS Anantharaman said. Sources in the bank, however, confirmed that the deal had been called off.
Fairfax last year received approval from the Reserve Bank of India (RBI) to buy up to 51 per cent in CSB, and it was planning to commit an investment of Rs 1,000 crore. The bank has submitted its valuation report to the RBI.
Sources said Fairfax offered Rs 95 per share but the bank was seeking Rs 180-200 per share. Fairfax also would not be able sell the stake for five years, sources said, adding it would not have been a viable option at the price being sought.
Sources said at least two CSB board members were keen on pushing the price to Rs 200 per share.
It may be difficult for CSB to find another investor willing to invest such a large amount in one deal. Further, delays in regulatory clearances will cost the bank time. The new investor might also not agree to the price the CSB board expected, a person close to the development said.
"Fairfax would have been a great addition to the shareholders’ list. Any new investor will take at least three to six months to find, and the bank should protect itself during this period," said S Santhanakrishnan, former chairman of CSB.
Investment banker Vallabh Bhanshali, has bought a 4 per cent stake in the bank from the Thailand-based Chansri Chawla family at Rs 160 a share.
CSB reported a net profit of Rs 1.55 crore in 2016-17 against a loss of Rs 149.72 crore a year ago. The bank has cleaned up its books through write-offs, rationalising of branches and other initiatives.
