In yet another deal mediated by Chennai-based chartered accountant S Gurumurthy, non-resident Indian investor C Sivasankaran has divested his 33 per cent holding in the Tuticorin-based Tamilnad Mercantile Bank for Rs 130 crore (Rs 1.3 billion).
The deal, which will see the ownership of the bank return to the Nadar community, was worked out at a meeting at Deputy Prime Minister L K Advani's residence this afternoon.
As per the agreement, C Sivasankaran will sell 95,418 shares, representing a 33 per cent stake, in Tamilnad Mercantile Bank to eight individual Nadar investors. The deal has to be sealed before December 31, 2004.
Interestingly, the news of the sellout by Sivasankaran comes close on the heels of the Reserve Bank of India rejecting his application for transferring his holding to four shell companies controlled by him. If the RBI had allowed Sivasankaran to transfer his shares, he would have got control of the bank and its management.
The Essar group had purchased a 67 per cent stake in Tamilnad Mercantile Bank from 313 individual investors in 1994 for Rs 57 crore (Rs 570 million), and sold it to Sivasankaran in 1996 for Rs 67 crore (Rs 670 million).
Interestingly, the shares were never transferred and continue to be in the name of the individual investors. Sivasankaran had subsequently transferred a 33 per cent stake to the community for Rs 81 crore (Rs 810 million).
"Sivasankaran has completely divested his holding in Tamilnad Mercantile Bank. Ramachandra Adityan, on behalf of the eight Nadar investors, signed the deal with Sivasan- karan in the presence of Advani," a source said.Gurumurthy refused to comment on the issue. It is also understood that Advani had initiated the deal. Bharatiya Janata Party President Venkaiah Naidu was also present when the deal was signed.