India: Indiabulls Housing scrip plummets 17% on OakNorth Bank deal

Visual from OakNorth Bank website

Shares of Indiabulls Housing Finance Ltd fell as much as 17% on Friday after the company said it will acquire 40% stake in UK’s OakNorth Bank for $100 million. The announcement was made on Wednesday when equity markets were closed on account of Diwali.

This morning, fears of unrelated diversification sent the stock tumbling. In intra-day trade, the stock touched a low of Rs.592.30, a level last seen on 29 June.

In a notice to the exchanges, the company explained the acquisition by saying that it will help the company chart a roadmap to a deposit-taking franchise.

“Pursuant to all applicable regulatory approvals from relevant regulators in lndia and the UK… Indiabulls Housing Finance Ltd is investing $100 million for 39.76% stake in OakNorth Bank, a licensed UK commercial Bank… the company will be the largest shareholder in the bank,” Indiabulls Housing Finance said in a regulatory filing.

“Sameer Gehlaut, chairman of the company, will be investing in his persona| capacity up to 10% stake in OakNorth Bank at the same valuation,” the release added.

Indiabulls Housing Finance is currently engaged in the business of providing home loans. As of September 2015, the company had outstanding loan assets ofRs.58,225 crore. In September, the company raised nearly Rs.4,000 crore through a qualified institutional placement (QIP) issue.

OakNorth Bank is a digitally focussed bank which targets the small business segment in the UK. The bank was started by entreprenuer Rishi Khosla and others in 2013.

At 11.15am, Indiabulls Housing Finance was trading at Rs.593.35 on BSE, down 17.1% from its previous close, while India’s benchmark Sensex index fell 1.05% to 25,596.46 points.

Also Read: Indiabulls Housing Finance to pick 40% in UK’s OakNorth Bank for $100m

Indiabulls plans to sell shares to raise up to $1b

This article was first published on Livemint.com

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.