Canara Bank will soon finalise proposals to divest its stake in two subsidiaries, Can Fin Homes and Canbank Factors, in which its holdings stand at 43.45 percent and 70 percent, respectively. The last date for submission of bids for empanelment of consultants for the purpose is December 26 and the bids will be opened the next day.
While the Bengaluru-based bank is selling off its entire stake in Canbank Factors, the dilution in Can Fin Homes will be 13.45 percent, leaving the bank with a residual stake of 30 percent.
Can Fin Homes is a listed company whose shares closed 2.14 percent higher at Rs 1,688 apiece on Friday. The stock has appreciated by 43 percent in the past six months and 70 percent over a one-year period.
The stake sale in the two subsidiaries is in line with the directive by the finance ministry to public sector banks to exit non-core business.
"Recently, Ministry of Finance, Govt of India has informed all banks to initiate necessary steps to review all non-core investments and take suitable decisions with regard to investment / divestment in non-core banking activities. Accordingly, in adherence to advice of Ministry of Finance and with a view to unlock the value of its strategic investments," the bank said in its bid document.
"The prospective buyers of stake in Can Fin Homes Ltd shall provide the maximum value for Canara Bank's stake of 13.45 percent besides bringing in their expertise and knowledge sharing as a strategic investor to the company. The buyer of stake in Canbank Factors shall provide a complete exit to Canara Bank by purchase of entire 70 percent stake of Canara Bank at optimum valuation and minimum time," the document further said.
Canara Bank shares closed at Rs 299 on Friday.
The lender has about 5,900 branches and about 10,200 ATMs across India; it also has eight overseas branches, seven subsidiaries, four associates and a joint venture. The total business of the bank (deposits and advances) was Rs 8,11,000 crore as of September 30, 2016.
The subsidiaries include CanBank Financial Services; CanBank Venture Capital Fund; Canara Robecco Asset Management Company; Canara Bank Securities; (formerly GILT Securities Trading Corpn.Ltd) and Canara HSBC Oriental Bank of Commerce Life Insurance Company.