HSBC has abandoned its wait-and-see strategy in India by buying a 14.71 per cent equity stake in UTI Bank Limited, a retail bank in India, from CDC Financial Services (Mauritius) Limited and South Asia Regional Fund, for a consideration of INR3.06 billion (US$66.42 million). In addition, HSBC will have the option to acquire an additional 5.37 per cent of UTI Bank Limited from CDC Financial Services (Mauritius) Limited at a consideration of INR1.12 billion (US$24.26 million).
HSBC will also be making an open offer to UTI Bank’s shareholders to buy at least an additional 20 per cent of UTI Bank at an offer price of INR90 per share (US$1.95 per share). This offer is in accordance with Indian regulations.
With some 200 branches and extension counters and over 1,000 ATMs nationwide, UTI Bank has one of the largest retail banking networks amongst private sector banks in India. It offers a comprehensive range of corporate banking, retail lending and deposit products and an Internet banking service to its 1 million customers. UTI Bank was established as a private sector bank in 1994, by Unit Trust of India (UTI), which is owned by the Government of India and is India’s first and largest asset management company. UTI Bank is listed on the Mumbai, Ahmedabad and National stock exchanges in India and had deposits of INR166 billion (US$3.6 billion) at September 2003.
“This is an investment in a well managed local financial institution which will allow us to participate more fully in the fast growing financial sector in India,” says David Eldon, Chairman of The Hong Kong and Shanghai Banking Corporation Limited. “We have had a long history in India of over 150 years and with this new investment, we aim to strengthen our presence in this dynamically growing economy.” The agreement and open offer are subject to regulatory and other approvals and are expected to be completed by April 2004.