Abu Dhabi fund eyes Bandhan Bank stake

Abu Dhabi's IHC, an investment company linked to Sheikh Tahnoon bin Zayed al-Nahyan, is reportedly in early discussions to buy into Bandhan Financial Services (BFSL). BFSL is the main promoter entity that holds over a third of Bandhan Bank. This potential transaction is designed to facilitate stake sales for early-stage financial investors.

Long-term backers like Singapore's GIC and the International Finance Corporation (IFC) are seeking an exit. These investors collectively held a substantial portion of BFSL and are looking for a full or partial divestment. Their stakes alone are estimated to be worth between $500-600 million.

BFSL also includes stakes from Sidbi, Financial Inclusion Trust, North East Financial Inclusion Trust, and the Bandhan Employees' Welfare Trust. The company's subsidiaries include Bandhan Technologies and Bandhan Financial Holdings, which oversees Bandhan Bank and other financial ventures. Bandhan Financial Holdings currently owns 37.5% of Bandhan Bank, a stake that must be reduced to 26% by 2030 as per RBI regulations.

Discussions have extended to other potential investors, including banks and sovereign funds in the Gulf, such as First Abu Dhabi Bank and Qatar Investment Authority, as well as private equity firms. While discussions are ongoing and preliminary, there is no certainty of a transaction. The complexity of the deal and regulatory considerations are key factors.