Morgan Stanley, Tata AIG & 2 others exit Dhanlaxmi Bank

Three emerging markets equity investors including Morgan Stanley and domestic private insurer Tata AIG sold their entire stakes in the Thrissur-based Dhanlaxmi Bank in the open market.

Dhanlaxmi Bank?s profitability is under stress thanks to the bank?s decision to go for an image makeover by shedding its regional tag by rapidly expanding outside Kerala by opening more branches in the northern and western parts of the country. Incidentally, the bank also does not have any domestic or foreign promoters making it a target for punters.

According to the information available with FE, Ward Ferry Management-managed Asian Small Companies Fund, the Hong Kong-based emerging market equity fund with a special focus on Asia and the pacific region had sold its entire 1.24% stake in Dhanlaxmi Bank between the quarter ending September last and the quarter ending December 2010.

The fund was holding 10,53,000 shares of Dhanlaxmi Bank as of the quarter ending September last aggregating to 1.24% of the outstanding stock of the bank.

Similarly, Morgan Stanley, which was holding 10,28,130 shares aggregating to 1.21% stake in Dhanlaxmi Bank had also liquidated its position between the second and third quarters of the current fiscal.

Emerging Markets South Asiastars Fund, a fund managed by Emerging Markets Management had also squared off its position in Dhanlaxmi Bank during the period. The fund was holding 1.06% stake in the lender.

Domestic private insurer Tata AIG too sold its entire stake in Dhanlaxmi Bank between the second and third quarter of this financial year. Tata AIG was holding 8,95,522 shares of Dhanlaxmi Bank aggregating to 1.05% stake in the old generation private sector bank as of the quarter ending September last.

According to market sources, all the funds had reportedly liquidated their positions in Dhanlaxmi Bank after the bank?s profitability came under stress due to its ambitious expansion plans. Dhanlaxmi Bank was considered as a major bet by foreign and domestic funds since the bank does not have any promoters, either domestic or foreign.

However, the Royal Bank of Scotland as the custodian of the Jupiter India Fund, a UK-based long-term capital growth fund focusing on equity investment in Indian companies have picked up 1.06% stake in the bank. Similarly, the US-based pension fund College Retirement Equities Fund had picked up a tad over 4% stake in the private sector lender from the open market between the quarters.