Mumbai-based Canara Bank, a state-owned financial institution, is making significant strides towards monetizing its non-core assets by launching initial public offerings (IPOs) for two of its subsidiaries, Canara Robeco Asset Management and Canara HSBC Life Insurance Company. In recent consultations with investment bankers, the bank discussed plans to execute the proposed stake sale, according to sources familiar with the matter.
IPO Plans Taking Shape
Sources indicate that Canara Bank has engaged with several investment bankers to assess the current market conditions for launching IPOs for its subsidiaries. Soon, a formal request for proposal (RFP) will be issued to identify book running lead managers, further advancing the IPO process.
Stake Ownership and Sale Expectations
Canara Robeco AMC, jointly owned by Canara Bank and ORIX Corporation Europe NV, has a stake distribution of 51% and 49% respectively. In the case of Canara HSBC Life Insurance, Canara Bank owns a majority stake of 51%, with HSBC and Punjab National Bank holding 26% and 23% stakes respectively. As per insiders, Canara Bank and ORIX Corporation are expected to sell a portion of their stakes in Canara Robeco AMC during the IPO. However, only Canara Bank is likely to dilute its stake in the life insurance firm.
Punjab National Bank’s Position
In a previous exchange filing in February, Punjab National Bank declared its decision not to sell its stake in Canara HSBC Life Insurance, intending to retain its investment contingent upon regulatory approvals. This stake was acquired following the amalgamation of the erstwhile Oriental Bank of Commerce (OBC).
Responses from Involved Parties
Despite seeking clarification from Canara Bank, Canara Robeco Asset Management, Canara HSBC Life, HSBC, Punjab National Bank, and ORIX Corporation, Economic Times did not receive any responses to their inquiries.
Potential Market Impact
Should Canara Robeco AMC proceed with its listing, it would become the fifth mutual fund to enter the primary market after prominent entities such as HDFC, Nippon Life, UTI, and Aditya Birla. As of March 31, 2023, Canara Robeco AMC ranks as India’s 16th largest mutual fund, managing an average asset value of ₹62,485 crore. The AMC reported revenue of ₹154 crore and a net profit of ₹60 crore for the fiscal year ending March 31, 2022.
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Financial Performance of Canara HSBC Life Insurance
Canara HSBC Life Insurance revealed its financial results for the fiscal year 2022, reporting a revenue of ₹8,496 crore and a net profit of ₹10.24 crore.
Canara Bank’s move to launch IPOs for Canara Robeco Asset Management and Canara HSBC Life Insurance represents a significant step in its strategic plan to monetize non-core assets. The potential IPOs present promising opportunities for investors, while simultaneously diversifying the Indian primary market for mutual funds. With the IPO process underway, further developments are eagerly anticipated.
About Canara Bank:
Canara Bank, headquartered in Bangalore, is a public sector bank in India. It was founded in Mangalore in 1906 by Ammembal Subba Rao Pai and was later nationalized in 1969. In addition to its presence in India, the bank has established offices in London, Dubai, and New York.
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