Several venture investors and startups have entered discussions with Bank of Baroda regarding the acquisition of a stake in the bank’s subsidiary, Nainital, according to insiders.
Among the potential investors are Premji Invest and the prominent stock brokerage firm Zerodha. These parties have engaged in conversations with Bank of Baroda, which has agreed to divest a significant stake in its subsidiary. The sources have requested anonymity due to the confidential nature of the negotiations.
Additionally, private equity firm Multiples has also been in discussions with the bank.
Bank of Baroda currently holds a stake of over 98% in Nainital Bank. It has been exploring options to divest its stake in Nainital Bank for more than a year, following regulatory guidance. In recent weeks, these discussions have progressed significantly.
Bank of Baroda, the second-largest public sector bank in India, initially plans to divest approximately 40 to 50% of its stake in Nainital Bank and eventually sell the remaining shares. It is anticipated that a consortium of multiple entities will emerge as the successful bidder.
It’s important to note that a definitive agreement has not been reached as of the time of this publication, and there remains uncertainty about whether the prospective investors will proceed with the investment.
Bank of Baroda, Multiples, and Premji Invest have not provided any comments in response to requests for information, while Zerodha has declined to comment.
These investment discussions coincide with the Reserve Bank of India’s evaluation of allowing external investors to invest in a select number of banks. Notably, Accel and Quona invested in Shivalik Bank last year, and fintech unicorn Slice recently received approval from the central bank to merge with North East Small Finance Bank.
In light of increased regulatory scrutiny on younger financial services firms, some high-profile venture investors have been seeking opportunities to invest in banks as a way to diversify their portfolios. These investments serve as a hedge against their fintech investments.
