GIC picks up 13.45% stake in Can Fin Homes for $113 mn

By TEAM VCC

  • 10 Mar 2017
Credit: Thinkstock

Singapore’s sovereign wealth fund GIC Pte Ltd has bought a 13.45% stake in mortgage lender Can Fin Homes Ltd from state-run Canara Bank for Rs 753.77 crore ($113 million).

Canara Bank said in a regulatory filing on Friday it sold 3.58 million shares in Can Fin Homes to Caladium Investment Pvt. Ltd, an affiliate of GIC, at Rs 2,105 apiece. That’s a premium of about 9% to the mortgage lender’s closing share price on Thursday. Shares of Can Fin Homes rose 1.6% to Rs 1,967.50 on Friday in a flat Mumbai market.

The bank, which held a 43.45% stake in Can Fin Homes before the transaction, said the deal is part of its plan to sell non-core assets.

Canara Bank is not the only state-run lender looking to sell non-core assets. Last month, IDBI Bank said it would sell some non-core investments.

The stake sales come as many state-run banks are grappling with rising bad loans and mounting losses.

Canara Bank posted a net loss of Rs 2,812 crore in the year through March 2016. It has returned to black this fiscal year and posted a three-fold rise in net profit of about Rs 322 crore in the October-December quarter of 2016. However, the bank’s gross bad loans in the quarter rose to 9.97% of total advances from 5.84% a year earlier.

IDBI Bank reported its net loss widened to Rs 2,254.96 crore for October-December 2016 from Rs 2,183.68 crore a year earlier. Its gross non-performing assets surged 17% to Rs 35,245.33 crore at the end of December.

For GIC, one of the most active sovereign wealth funds in India, the deal is the latest bet on a financial services company in the country.

Can Fin Homes is the second mortgage lender in which GIC has invested within six months; it came in as an anchor investor in PNB Housing Finance Ltd ahead of the company’s initial public offering in October 2016.

GIC has also invested in a few of private-sector banks such as HDFC Bank and Kotak Mahindra Bank, microlenders and non-banking finance companies.

In May 2015, GIC bought a stake in Bandhan Bank through a fresh equity infusion of Rs 1,020 crore. In April last year, it invested in Janalakshmi Financial Services Pvt. Ltd as part of a Rs 1,000-crore funding round led by private equity firm TPG. And in November, GIC affiliate Caladium invested Rs 340 crore in Capital First Ltd, an NBFC majority owned by private equity firm Warburg Pincus.

Investment bank JM Financial advised on the Can Fin transaction. Law firm Dua Associates advised Canara Bank on legal aspects.

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