21-Sep-2023
2 mins read
In a recent development, HDFC Asset Management Company (HDFC AMC) has received the green light from the Reserve Bank of India (RBI) to acquire up to a 9.5% stake in both Karur Vysya Bank and DCB Bank. In early trading, both Karur Vysya Bank and DCB Bank witnessed their stock prices surge by up to 4%, reflecting the market’s positive response to this news. This approval has had an immediate impact on the stock prices of both banks, with a notable surge of up to 4% in early trading on Thursday.
HDFC AMC’s Role and Stakeholder Information
As of June 2023, HDFC Asset Management Company (HDFC AMC) serves as the investment manager for HDFC Mutual Fund’s schemes. HDFC holds a majority stake of 52.6% in HDFC AMC and is the exclusive promoter of the company.
Karur Vysya Bank’s Regulatory Filing
Karur Vysya Bank, in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, officially announced, “The Karur Vysya Bank Ltd. has received approval from the Reserve Bank of India, as per their letter dated September 20, 2023. This approval grants permission to HDFC Asset Management Company Ltd. (HDFC AMC) for acquiring an aggregate holding of up to 9.5% of the paid-up share capital or voting rights of The Karur Vysya Bank Ltd.”
HDFC AMC must ensure that its aggregate holding in the bank does not exceed 9.5% of the paid-up share capital or voting rights at all times. Additionally, the bank noted that if the aggregate holding falls below 5%, prior approval from RBI will be required to increase it to 5% or more.
DCB Bank’s Regulatory Filing
DCB Bank separately informed the stock exchanges of the RBI’s approval. In their communication, DCB Bank stated, “We wish to notify you that on September 20, 2023, DCB Bank received communication from the Reserve Bank of India (RBI) confirming its approval for HDFC Asset Management Company Limited (“AMC”) to acquire a cumulative stake of up to 9.5% in the paid-up share capital or voting rights of the Bank.”
The central bank has advised HDFC AMC to acquire a stake in DCB Bank within one year from the approval date.
Market Response
The market’s immediate response to this news was positive, with stock prices of both Karur Vysya Bank and DCB Bank experiencing an upswing of up to 4% during early trading. This surge underscores investor confidence in the strategic move and the potential benefits it may bring to all parties involved.
HDFC AMC’s Recent Performance
HDFC Asset Management Company (HDFC AMC) has reported significant profit growth in the first quarter of fiscal year 2024, with a remarkable increase of 52%. Additionally, the firm’s average assets under management (AUM) have seen a rise, reaching Rs 4.86 lakh crore.
Investors and market analysts are closely watching the developments as HDFC AMC positions itself for substantial stake acquisitions in two prominent private sector banks.
Conclusion
HDFC AMC’s approval to acquire a 9.5% stake in Karur Vysya Bank and DCB Bank marks a significant development in India’s financial landscape. As the company continues to expand its influence in the banking sector, investors are watching closely to see how this partnership will unfold and contribute to the growth and stability of these esteemed financial institutions.