Popular Public Sector Bank Canara Bank recently announced its intention to sell a portion of its stake in Canbank Factors with the anticipation of raising Rs. 450 crore. The bank recently scrapped plans to sell its entire shareholding in Can Fin Homes where it holds a 30% stake, whilst deciding to offload a proportional percentage of its stake in Canbank Factors to raise Rs. 450 crore.
Canara Bank currently holds a 70% stake in the factoring venture.
Canara Bank CEO and MD, Rakesh Sharma, said in a statement that the bank expects to find a buyer and close the deal by the first quarter of FY18-19. The company’s turnover until the close of September 2017, for the first half of the fiscal, was about Rs. 850 crore with gross NPAs standing at Rs. 219 crore.
The move comes as Canara Bank looks to raise capital to further expand operations and improve market share, while also trying to circumvent bad loans that lead to Non-Performing Assets. The bank called off its intention to offload its stake in its housing finance company Can Fin Homes last week, after being offered disappointing price quotations.
Shares of Can Fin Homes declined by almost 11% after Canara Bank called off plans to divest its holding.