Tuesday, May 29, 2012

South Indian Bank Stake Bought by First Carlyle

VA Joseph,
Managing Director & CEO,
South Indian Bank Ltd.

By Staff Reporter:

South Indian Bank Ltd (BSE: 532218, NSE: SOUTHBANK) counter in BSE witnessed a large deal on Tuesday, 29th May 2012, when a Carlyle Group fund bought 2.26 crore shares at Rs. 26.50 a share.

The buy was disclosed at Bombay Stock Exchange after trading hours on Tuesday. 

The specific FII buyer, First Carlyle Ventures Mauritius, invested Rs. 59.95 crore to acquire an almost 2% stake in the private sector bank, through this deal.

The FII sub-account, India Capital Fund, was visible as an identifiable seller, offloading 2 crore shares at the same rate. 

India Capital Fund is registered under the noted FII, India Capital Management, founded by former London based business journalist Dr. Jon Thorn.

This Mauritius based and India-focused FII has been South Indian Bank’s largest shareholder with 14.64% stake, held by three of its funds, India Institutional Fund, India Capital Opportunities 1, and Tuesday’s seller, India Capital Fund.

The large deals on Tuesday happened in South Indian Bank’s older and secondary scrip in BSE with code 632218.

The main South Indian Bank scrip, coded 532218, saw only a volume of 7.01 lakh shares and high price of only Rs. 24.15 in BSE.

On the fundamental side, South Indian Bank had recently announced good Q4 numbers with net profit jumping by 49.14% year-on-year, while interest income was up by 41.23%.

Aided by these good fourth quarter numbers, the small-sized bank could also post good numbers for FY’12. Net profit is up by 37.29%, while interest income is up by 46.50%.

The bank has reasonably contained its non-interest expense growth, while non-core income has shown a reasonable growth.

Another possible buy cue for the stock has been South Indian Bank’s recent announcement that it would be cutting its controversial capital raising plan of Rs. 1000 crore by 60%, with the new plan involving only Rs. 400 crore, and that too only when it can get good valuations. This move has allayed equity dilution concerns to an extent.

Despite being against a matching seller, the buy by First Carlyle looks positive for the scrip in the long-term, if not for the reason that the potential impact from a major sell has been well absorbed.

South Indian Bank stock has been a very rewarding one for many of its early investors. The scrip which enjoys a high institutional investor participation of 53.79%, is dominated by FIIs. SIB doesn't have an official promoter group.

Largest investors in the counter, apart from the three India Capital funds include, Argonaut Ventures, FID Funds (Mauritius), JM Financial Trustee Company, Life Insurance Corporation of India, Deutsche Securities Mauritius, Acacia Partners, Morgan Stanley Mauritius Company, Cx Securities, DB International (Asia), Union Bank of India, Acacia Institutional Partners, and The Federal Bank.

The deal was also at a premium of 11.81% to yesterday’s closing price of the main South Indian Bank scrip.

On Tuesday, the main South Indian Bank scrip rallied and closed trade in both BSE and NSE at Rs. 23.70, up by 6.28%.