The Reserve Bank of India has given its in-principle approval for the restructuring of the equity of Centurion Bank.
The proposal will come up for clearance at the Goa Bench of Bombay high court on Friday.
Centurion Bank chairman and managing director V Janakiraman confirmed that the bank has received the in-principle approval of the regulator.
In one of the most complex deals in Indian financial history, a group of investors led by former Standard Chartered Bank CEO Rana Talwar-promoted Sabre Capital, are set to take a 66 per cent stake in Centurion Bank.
The Sabre led investor group, which includes banks and private equity investors, will bring in Rs 219 crore (Rs 2.19 billion) in phases to recapitalise Centurion Bank. The recapitalisation also includes a public cum rights issue of Rs 65 crore (Rs 650 million).
As part of the Sabre team, the Oman-based BankMuscat is picking up a 26 per cent stake in Centurion for of Rs 75 crore (Rs 750 million).
BankMuscat has one branch in Bangalore, which will be merged into Centurion.
Following this, the 65 personnel of BankMuscat will be absorbed by Centurion Bank. The existing share capital of BankMuscat is at Rs 50 crore (Rs 500 million).
The proposal by Sabre envisages capital infusion in two phases. In the first phase, the existing share capital of Rs 152.47 crore (Rs 1.524 billion) will be bought down to Rs 72.98 crore (Rs 729.8 million), which would be divided into share capital and reserves.
The face value of the share would be reduced from Rs 10 to either Re 1 or Rs 4.
The investors led by Sabre would bring in Rs 129 crore (Rs 1.29 billion), while exiting investors of the bank such as the Asian Development Bank and Keppel Bank of Singapore will bring in Rs 25 crore (Rs 250 million), thus taking the capital infusion to Rs 154 crore (Rs 1.54 million).
The exiting major foreign stakeholders in the bank are, Keppel (around 17.71per cent), ADB (10.22 per cent) and IFC (8 per cent).
The holding of existing foreign shareholders in the bank would be reduced from 36 per cent to 16.1 per cent.
The 26 per cent stake pledged by Dev Ahuja's TCFC Finance to settle his obligations to the bank will be reduced post to 5 per cent. This will be continued to be held in a trust.
