Bank of Baroda, one of the largest public sector banks in India, is in talks with venture investors and startups to sell a significant stake in its subsidiary, Nainital Bank. According to anonymous sources, Premji Invest, Zerodha, and Multiples are among the prospective backers interested in acquiring a stake in the subsidiary.
Nainital Bank, in which Bank of Baroda holds over 98% stake, operates in five Indian states and has more than 140 branches. Bank of Baroda has been looking to divest its stake in Nainital Bank and discussions have reached serious deliberations in recent weeks.
The bank initially plans to divest about 40 to 50% stake in Nainital Bank and eventually sell the remaining shares, according to one of the sources. It is likely that a consortium of multiple entities will win the bid for the stake.
However, it is important to note that a deal has not yet been reached and the existing prospective investors may not necessarily proceed with the investment, cautioned the sources familiar with the situation.
Bank of Baroda, Multiples, Premji Invest, and Zerodha have not responded to requests for comment regarding the discussions.
These investment talks come at a time when the Reserve Bank of India is evaluating the possibility of permitting external investors to invest in a select few lenders. Last year, Accel and Quona backed Shivalik Bank, and fintech unicorn Slice recently received approval from the central bank to merge with North East Small Finance Bank.
It remains to be seen how these discussions progress and whether Bank of Baroda can successfully divest its stake in Nainital Bank. The outcome of these negotiations could have significant implications for both the bank and the prospective investors involved.