The Hindu Business Line : HSBC may have to `pay more' for 14.7 pc in UTI Bank

THE HSBC group may have to pay a higher price than the Rs 306-crore to CDC Financial Services (Mauritius) Ltd (CDC-FSL) and the South Asia Regional Fund (SARF) for buying out their combined 14.7 per cent stake in the UTI Bank in case they revise their open offer price to a level higher than the acquisition price of Rs 90 per share.

A clause to this effect has been included in HSBC's application to the Foreign Investment Promotion Board (FIPB) to seek clearance for the transaction.

This is because the buy-out agreement includes such a condition and the transaction has been completed at a price of Rs 90 per share. "In case HSBC Asia Pacific Holdings (UK) Ltd (HAPC) acquires shares in the open offer at a price higher than Rs 90 per share of UTI Bank, such higher price would be payable to CDC-FSL and SARF for the shares being acquired under the agreement and as per the options," the application has said.

HSBC, however, had earlier said that it would not be prepared to increase the price for its open offer of 20 per cent additional share in UTI Bank though the price of UTI Bank scrip had shot up much beyond the Rs 90-level immediately after the announcement of the stake acquisition some days ago.

UTI Bank share has gone up steadily since the acquisition and closed on Tuesday at Rs 122.20 on the NSE (Rs 121.65 on the BSE). Market sources reveal that the response to the open offer is poor. Investors are finding it more profitable to offload in the open market than responding to the open offer.

"If they want to really acquire another 20 per cent through the open offer, they will surely have to revise the offer price in which case they will have to make extra payment to the CDC and SARF or remain satisfied with a much lower stake than the targeted 40.07 per cent," said a senior broker.

Marketmen also pointed out that there is suddenly huge interest in the counter backed by above substantial increase in average delivery percentages.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Reliance urges NTPC Kayamkulam plant relocation to Kakinada

Quarterly results: Adding to corporate burden?

S&P raises India's foreign currency rating to stable

HSBC may have to `pay more' for 14.7 pc in UTI Bank

`Govt to raise FDI cap in pvt banks'

Ads thunder before Indian wonder Down Under