Stake Sale: CSB is Looking Beyond Fairfax, says T S Anantharaman

Thrissur: Catholic Syrian Bank (CSB) has confirmed that the proposed sale of 51 per cent stake to Fairfax Financial Holdings Ltd. has run into rough weather. Speaking to Destination Kerala, T S Anantharaman, Chairman, CSB, however, stopped short of saying that the deal had collapsed. “Still from our side, we have not violated the deal. We have written to the Reserve Bank of India and to those people about our valuation. They (Fairfax) had informed us about their valuation. It stands there.”

When asked whether negotiations are still going on, Anantharaman said, “I would say it is still ‘work in progress’ but nothing much has happened in the last couple of days. I do not think it is a closed deal yet but there is definitely a price difference and hence, it remains where it was,” he said.

“We need capital. No doubt about it but we are not desperate. We have capital for functioning without much trouble. But, expansion is part and parcel of any growth story. Whether we should take 5 per cent type of thing from three to four people or should go for 51 per cent is a matter Capital Raising Committee is examining and we will reach a conclusion on it very soon.”

CSB, one of India’s oldest private sector lenders, has proposed a 51 per cent stake sale to Prem Watsa-owned Canada’s Fairfax Financial Holdings Ltd. at a reported Rs.160 per share, which values the bank at nearly Rs. 1,300 crore. It is learnt that the Fairfax arrived at a valuation of Rs. 60-100 a share.

Anantharaman said that there was fairly a large difference in valuation. “It is just a matter of valuation. Their price is below the valuation done by our valuer. There is fairly large difference. The valuation is not tallying,” the CSB Chairman said.

Commenting on reports that CSB is reconsidering IPO plan, Anantharaman said that all options are on the table. “We have to decide what exactly we want. We need capital. No doubt about it but we are not desperate. We have capital for functioning without much trouble. But, expansion is part and parcel of any growth story. We are really preparing for a rapid expansion. So we need capital. Whether we should take 5 per cent type of thing from three to four people or should go for 51 per cent is a matter Capital Raising Committee is examining and we will reach a conclusion on it very soon.”

He added that there is a lot of interest in the market from marquee investors to invest in CSB shares. According to him, interest varies from willingness to invest small amounts of money to acquiring 51 per cent of stake, provided the Reserve Bank permits them. It was the first time in the banking history that RBI had given its approval to a non-banking financial entity to acquire majority stake in a private sector bank in India under FDI.

“If Fairfax deal does not happen due to whatever reason, there are large number of groups – similar quality investors – showing willingness to invest based on very good valuation. We are getting lot of offers. However, we cannot directly entertain any such offers now because to raise capital of more than 10 per cent RBI’s permission is needed. Since RBI has already granted approval to Fairfax for acquiring 51 per cent stake in the case of CSB, we believe it may favourably consider similar interests of other potential investors. So, if such a sanction comes through, many people with right credentials will be able to invest. That is the feeling in the market,” Anantharaman said.

CSB reported a profit of Rs. 1.55 crore in 2016-17 against a loss of Rs. 149.72 crore the year before. CSB has a strong base in Kerala, Tamil Nadu, Karnataka, among other states.