Lulu Group agrees to buy 4.99% stake in CSB; bank gets new MD

PTI Posted: Feb 13, 2013 at 0000 hrs
Mumbai

Dubai-based Kerala businessman Yusuffali MA, who runs the largest retail chain Lulu Centre in the UAE, has agreed to pick up 4.99 per cent stake in Catholic Syrian Bank from its largest shareholder Sura Chanrichawla and is awaiting RBI nod, said bank Chairman S Santhanakrishnan.

The CSB chief said he has appointed Rakesh Bhatia from HSBC Group as the new Managing Director, who has also picked up around 1 per cent in the Thrissur-based unlisted bank.

"The Lulu Centre promoter has agreed to pick up 4.99 per cent stake in CSB from Bangkok-based NRI businessman Chanrichawla, and is awaiting RBI approval. If the regulator allows, Yusuffali is willing to pick up another 3 per cent stake from Chanrichawla," Santhanakrishnan told PTI from Chennai today.

When contacted in Dubai, Yusuffali\'s office said he is touring Europe, and thus could not elicit his comment.

If the deal goes through, Chanrichawla could partially meet the March 31 RBI deadline to bring down his stake in the 93-year-old lender to under 13 per cent from the present 18 per cent.

"Another nearly 1 per cent stake of Chanrichawla has been picked up by Rakesh Bhatia, who is the new Managing Director of bank," Santhanakrishnan said.

Santhanakrishnan further said, "Bhatia, who comes from the HSBC Group, is bringing in Rs 7.5 crore to the bank apart from his vast experience. Bhatia has already put in around Rs 6 crore for around 1 per cent stake and he is committed to invest another Rs 1.5 crore."

The RBI has made its prior approval mandatory for any stake sale in CSB running into more than 1 per cent of its total shares, unlike other banks where an investor is free to buy up to 5 per cent equity.

Mumbai-based brokerage Edelwiess holds 4.99 per cent in the bank, while around 14 per cent is owned by three Hong Kong-based funds.

The Bangkok-based NRI businessman Chanrichawla has got many extensions from the RBI since 2010 to trim his stake. The current deadline to do so is March 31.

Though many times he could identify an investor in the past, the NRI failed to satisfy RBI with the prospective buyer. Still over the years, Chanrichawla has trimmed his stake to 18 per cent now from a high 34 per cent initially.

Santhanakrishnan described the Thrissur-born owner of the LuLu Group as a "good investor". Moreover, the CSB Chairman said, "Yusuffali is not interested in running the bank, which is a major plus point for the deal to secure the RBI mandate."

On whether Yusaffali\'s coming on board has the board approval and the blessings of the Church, he said "the board is backing Yusuffali, while the Church is fully supporting the move."

"The Archdiocese of Thrissur is only happy to let the Lulu Group Chairman pick the stake and help the bank grow," Santhanakrishnan said, adding his \'son of the soil\' credential also helped get the Church back him.

While the Church does not have any direct holding in the bank, it has a say in the affairs of the lender, which had been initially promoted by the members of the Church.

The Church had in 2010 blocked attempts of Federal Bank, the largest private bank in Kerala, to take over CSB citing loss of the original identity of the bank promoted by Syrian Catholics from the region. Following this Federal had exited its 4.99 per cent stake in the bank.

The LuLu Group is reportedly building India\'s largest retail chain in Kochi. The Group is the largest retailer in Dubai and figures amongst the top 10 retail chains globally.

Yusuffali, who moved to the Gulf in the mid-70s, heads the USD 5.5-billion LuLu Group as Managing Director and owns the eponymous hypermarket chain in West Asia.

He is on the boards of Cochin International Airport and the State Government-run company Infrastructures Kerala, among other organisations. He was on the board of Air India till a few years ago.

As on March 31, 2012, CSB had an asset base of Rs 12,047 crore and net profit of Rs 25.9 crore.