International Value Advisors (Iva), the $8-billion US-based long term growth fund and Reliance Capital, promoted by the Anil Dhirubhai Ambani Group (ADAG), has picked up minority stakes in the Kochi-based private sector lender, The Federal Bank. Iva had picked up the stake in Federal Bank through one of its secondary market investment vehicle Iva Worldwide Fund through open market purchases.
According to the latest ownership pattern filed by the Federal Bank with regulators, as of the end of the June quarter, Reliance Capital Trustee Fund was holding 19.9 lakh shares or 1.16% stake in the Kerala-based old generation private sector lender.
The Reliance Fund had picked up the stake in Federal Bank through secondary market purchases. Similarly, Iva has been holding 17.22 lakh shares or 1.01% stake in Federal Bank as of the end of June quarter of this fiscal. Iva had also lapped up the Federal Bank stock from the open market, market sources said.
However, the Irish asset management company Sarlam Asset Management had divested its entire holding of 1.22% in Federal Bank. ICICI Prudential had also exited Federal Bank by selling its 1.06% holding in the open market.
Federal Bank is the first Indian company in the fund’s investment portfolio. The Anil Ambani Group had bought the Federal Bank shares through Reliance Capital Trustee Company, a fund managed by one of the Group’s investment arm Reliance Capital.
Market sources say while the investment by the US long term growth fund in Federal Bank might have been driven by pure financial considerations, the ADAG Group’s entry into the Federal Bank may well prove to be a game changer. “It is no secret that the Anil Ambani Group wants to enter the commercial banking space once the regulatory air regarding the ownership structure of private sector banks has been cleared by the authorities concerned. RBI is expected to publish a discussion paper on the subject in a fortnight’s time. So, the timing of the investment by the Reliance Capital seems to be very important,” an analyst with a local brokerage who does not wish to be named said.