By Gopika Gopakumar
(Reuters) -Dubai-based bank Emirates NBD is in advanced talks to buy a stake in Indian private lender RBL Bank, two people familiar with the deal told Reuters.
The Dubai bank is looking to invest in the lender via a preferential allotment of equity and warrants, one of the people familiar with the deal said.
The initial stake purchase could go up to 25%, that person said.
Both sources declined to be identified as they are not authorised to speak to the media.
The talks were first reported by two Indian financial media outlets.
Emirates NBD declined comment while RBL Bank did not immediately respond to a Reuters request for comment.
RBL Bank has a market capitalisation of 177.28 billion Indian rupees ($2.00 billion) and is widely held by retail shareholders and fund houses, as per data from NSE. Shares on Monday closed down 0.82%.
Reuters could not determine the value of the deal or if it will be announced imminently.
The UAE’s second-largest bank by total assets has been looking to expand in India and was previously in talks to pick up a stake in government-owned IDBI Bank.
Reuters reported in June that the Reserve Bank of India (RBI) was considering possible rule changes to allow higher foreign ownership in Indian banks, amid overseas buyers’ interest and India’s need for long-term capital.
Under current regulations, foreigners, including portfolio investors, can own up to 74%, but a strategic foreign investor is limited to 15%.
In May, the RBI made an exception to allow Japan’s Sumitomo Mitsui Banking Corp (SMBC) to buy a 20% stake in Yes Bank. SMBC agreed to acquire a further 4.2% stake in September.
($1 = 88.6350 Indian rupees)
(Reporting by Gopika Gopakumar in Mumbai; Additional reporting by Ananta Agarwal in Bengaluru and Federico Maccioni; Editing by Tasim Zahid and Tomasz Janowski)
