Rabo allowed to retain pre-IPO Yes Bank stake

Mumbai, Feb 1 | Updated: Feb 2 2006, 05:30am hrs
The Netherlands-based Rabobank, which has a presence in India through its wholly-owned non-banking finance company Rabo India Finance, has been allowed to retain its pre-initial public offer (IPO) stake of 20% in the private sector Yes Bank. After its stake fell to 14.8% post-IPO, Rabo has acquired fresh shares through the foreign institutional investor (FII) account route and hiked it to 19.4%.

Confirming the Rabobank stake hike, Yes Bank chairman and managing director Rana Kapoor told FE: "Rabobank's stake in Yes Bank was regulatorily capped at 20% as part of the license conditions. The original stake had fallen to 14.8% after our IPO. Now, Rabo has hiked it to 19.4% through its FII account."

The Bombay Stock Exchange (BSE) website lists Rabobank International Holding as having a 14.81% stake in Yes Bank. Mr Kapoor explained the residual stake was under the FII category. Reserve Bank of India (RBI) has allowed the stake level to be retained since Rabo India Finance is not a banking entity.

While Rabobank's initial stake in Yes Bank was at 20% as a "strategic investor", the stake declined as a result of proportionate dilution in the wake of the IPO. However, at that stage, Yes Bank and Rabo approached RBI for permission for the Rabo stake to be hiked again subject to the 20% cap, Mr Kapoor said.

'YES' TO STAKE HIKE

Rabo stake capped at 20% as part of licence conditions
Stake fell to 14.8% as a result of Yes Bank IPO
RBI cleared further stake hike since Rabo India Finance is not a banking entity, say sources
Original Rabo stake has a 5-year lock-in, till 2009
RBI norms prohibit foreign banks having regional presence from holding over 5% in an Indian private sector bank

Importantly, the RBI norms, issued on February 28, 2005, say: "Banks (including foreign banks having branch presence in India)/FIs should not acquire any fresh stake in a bank's equity shares, if by such acquisition, the investing bank's/FI's holding exceeds 5% of the investee bank's equity capital" RBI did not offer any comment until the time of going to press. A Rabo India Finance spokesperson also did not make any comment on the matter. The Rabo original stake (which fell to 14.8%) has a five-year lock-in condition, which runs up to 2009. Sources said in case Rabobank has any plans to set up a bank at a later stage, it will then have to dilute its Yes Bank stake to below 5% in accordance with the regulations.