Mahindra and Mahindra Exits RBL Bank with INR 678 Crore Stake Sale

In 2023, the corporation paid INR 417 crore to acquire a 3.53% share in RBL Bank as a treasury investment. M&M claims that it has gained 62.5% from the sale of its ownership in the bank.

According to the exchange filing, the corporation is referring to its letter from July 26, 2023, in which it announced that it would be purchasing a 3.53% share in RBL Bank for INR 417 crores as a treasury investment.

In light of the aforementioned, the company would like to notify the exchange that it sold all of its shares in RBL Bank today for INR 678 crores, which represents a 62.5% return on investment. Mahindra and Mahindra told the stock exchanges on July 26, 2023, that it had purchased a 3.53% interest in RBL Bank and that it will raise its ownership percentage in accordance with price, necessary procedures, and regulatory clearances.

RBL and Emirates NBD Plans

M&M's most recent action follows the lender's announcement that Emirates NBD intends to pay $3 billion, or around INR 26,850 crore, to purchase a controlling interest in RBL Bank Limited. This will be the largest foreign direct investment and equity fundraise in the history of the Indian banking industry.

Months after the RBI gave the Dubai bank in-principle approval to create a wholly owned subsidiary in India, RBL Bank made the announcement. After the deal is completed, Emirates NBD will be named the domestic bank's promoter, subject to regulatory and other approvals. As a result, it will also have the authority to propose directors for the bank's board.

What M&M MD Stated?

Anish Shah, the managing director of M&M, stated shortly after the original deal that the carmaker had no plans to make any more investments in RBL Bank unless there was a strong rationale for doing so. The original intention was to keep the stake at 9.9%. "There is no intention of going further at this time," he continued. However, it improves M&M's understanding of the industry and helps the company to increase the value of the brand with a market capitalisation of around INR 40,000. Given Mahindra's primary concentration on cars, analysts have questioned the investment's justification. Later, the business declared that it had no plans to increase its ownership in the lender.