Canara Bank shares rally over 2% as RBI gives nod to dilute stake in MF and insurance firms via IPO

Canara Bank shares have risen over 2.4% to hit an intra-day high of Rs 110.80 after the company got approval from the RBI to sell stakes in mutual fund and insurance arms via an initial public offering. 

“Reserve Bank of India vide its letter dated 5th December 2024 has accorded approval to our Bank for divesting its shareholding in Canara Robeco Asset Management Company and Canara HSBC Life Insurance Company by 13% and 14.5% respectively through Initial Public Offer,” the bank said in an exchange filing.

As per the exemption given by the Government of India, the RBI has stated the bank to bring down its stake in these entities up to 30% by October 2029.

Following this, the bank will initiate the process of IPO and will keep the bourses informed about the material developments in this regard, said Canara Bank.

Canara Robeco Mutual Fund is one of the oldest mutual funds in India which was earlier known as Canbank Mutual Fund. In 2007, Canara Bank partnered with Robeco (now a part of ORIX Corporation, Japan) and the mutual fund was renamed as Canara Robeco Mutual Fund. 

Canara HSBC Life Insurance Company is a joint venture between Canara Bank and HSBC Insurance (Asia Pacific) Holdings. Canara Bank holds a 51% stake in the insurance firm and HSBC Insurance Holdings 26%. While Punjab National Bank holds 23% as an investor in the company.

In June 2024, PNB’s Board approved divesting 10% shareholding in the company through an initial public offering (IPO) route.

Canara Bank Vs Nifty 50

The bank stock has risen 8.4% in the last five trading sessions. It has risen 4.3% in the last one month. However, it has erased almost 7% of investors’ wealth in the past six months. The stock has given a return of 24% from year to date and more than 25% in the previous one year.

To compare, the benchmark index, Nifty 50 has risen 2.8% in the last five trading sessions. The index has increased by 0.9% in the past one month and over 8% in the last six months. The index has given a return of more than 13% from year to date and 18% in the last one year.