US-based hedge fund Route One Investment Company (ROIC) has received the regulatory approval from the Reserve Bank of India (RBI) to raise its stake in private sector lender IndusInd Bank by up to 10%.
The approval allows ROIC to double its stake in the Indian lender, where it currently has a 4.96% holding.
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In a regulatory filing to the National Stock Exchange (NSE), IndusInd Bank said: “Route One Investment Company LP, USA (ROIC) is an existing investor holding approximately 4.96% of the issued and subscribed capital of the Bank.
“ROIC approached the Reserve Bank of India seeking a prior approval to increase their stake in the Bank up to 10%, in accordance with the RBI Master Direction on Prior Approval for Acquisition of Shares in Private Sector Banks.”
IndusInd Bank’s board granted the approval to ROIC for the proposed acquisition, earlier this month.
The bank added: “RBI has forwarded the bank a copy of the letter addressed to ROIC, granting approval for increasing their shareholding up to 10% of the paid-up voting equity capital of IndusInd Bank.”
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By GlobalDataThe investment from ROIC will help the bank boost its capital adequacy from 15.04% as of March 2020.
Earlier this year, the Hinduja brothers – the bank’s promoters – also expressed their interest to raise their stake in IndusInd Bank to 26% from less than 15%.
The central bank, however, declined this request.
In a separate filing, the bank said: “You may have noted that the promoters of the bank have applied to the Reserve Bank of India (RBI) for increasing their permissible holdings to 26%.
“On a fully diluted basis the promoters of the bank have a holding of 14.68% which is very close to the current regulatory cap of 15%.”
Therefore, last month, the bank said that its promoters will buy additional shares from open market to reach the regulatory cap of 15% and agreed to maintain this limit.
