Our Bureau

Chennai , June 16

DBS Bank of Singapore will pick up a 37.5 per cent stake in Cholamandalam Investment and Finance Company of the Murugappa group.

Part of the stake acquisition will be through the purchase of shares from Tube Investment of India (TI), another Murugappa company. The sale will make TI richer by Rs 86 crore.

DBS Bank will pick up the 37.5 per cent stake through three avenues — purchase of shares of the company from TI, subscription to a preferential offer of shares and an open public offer. In all, DBS will be spending about Rs 228 crore on the acquisition.

After the acquisition, DBS Bank and the Murugappa group will become equal partners in the non-banking finance company. Chola Investment will then be renamed Cholamandalam DBS Finance Ltd.

Though the TI board on Thursday approved the sale of 25 per cent of equity of Chola Investment, the company will sell only 15.1 per cent or 57.3 lakh shares for Rs 150 each.

DBS will also make a public offer for 20 per cent of Chola Investment's equity for the same price. In addition, Chola Investment will make to DBS a preferential offer of as many shares as required to bring the bank stake in the company to 37.5 per cent. It is expected that Chola Investment's net worth will increase by Rs 45 crore through the preferential offer.

Responding to a question, Mr M. A. Alagappan, Chairman, TI and Chola Investment, said at a press conference that DBS coming into the company would bring in expertise to get into all areas of financing such as personal loans and mortgages. Chola Investment today specialises only in vehicle financing.

Mr Alagappan said that "eventually" the shares of Cholamandalam DBS Finance Ltd could be listed on the Singapore Stock Exchange.

Mr Jackson Tai, Vice-Chairman & Chief Executive Officer, DBS Bank, said that the bank at present has one branch in Mumbai. A branch in New Delhi could also start functioning soon.

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