Indiabulls Housing Finance (IHF) is acquiring nearly 40% stake in UK-based OakNorth Bank, a full-service lender, for about $100 million, in a bid to become the largest shareholder in the bank, according to a statement.
The deal will also see Indiabulls promoter and chairman Sameer Gehlaut pick a 10 per cent stake in the UK bank at the same valuation, subject to regulatory approvals.
OakNorth Bank has a successful deposit-taking franchise and this acquisition will give the company an opportunity to build credentials and track record on this crucial aspect of establishing a comprehensive liability profile for its core business, Indiabulls said in a statement.
“With this, total investments of the Group in the vibrant economy of London would be in excess of Rs 4,200 crore,” Gehlaut said.
OakNorth Bank is focused on the structurally underserved small and medium enterprises sector (SME) in the UK, loan disbursals to the segment being the equivalent of $5 billion.
The regulatory approvals for this investment were approved by the Strategic Investment Committee for Liability Franchise Development, headed by former Deputy Governor of RBI and now an independent director on the Board of Indiabulls KC Chakrabarty, for the purpose of creating a practical roadmap to a deposit-taking franchise.
The deal will improve the perception of the company and also go a long way in providing comfort to all stakeholders of the company, including rating agencies, Indiabulls said.
IHF maintains its guidance of 20–25 per cent annual growth across all financial parameters going forward. This investment will have no impact on its dividend policy guidance of paying 50 per cent of profits as dividends, it said.