A number of venture investors and startups are engaging with Bank of Baroda to acquire a stake in the lender’s subsidiary Nainital, according to people familiar with the matter.
Premji Invest, stock broking giant Zerodha and Peak XV-backed fintech startup MobiKwik are among the prospective backers that have held conversations with Bank of Baroda, which has agreed to sell a significant stake in the subsidiary, the people said, requesting anonymity as the deliberations are private.
Private equity firms Multiples and Gaja Capital have also engaged with the lender, one person said. MobiKwik is leading one of the groups that is looking to bid for the stake, another source familiar with the matter said.
Bank of Baroda, which owns more than a 98% stake in Nainital Bank, has been looking to divest its stake in Nainital Bank, which operates in five Indian states and has over 140 branches, for over a year at the direction of the regulator. The talks have reached serious deliberations in recent weeks.
Bank of Baroda, the second largest PSU bank in India, plans to initially divest about a 40-50% stake in Nainital Bank and eventually sell the remaining shares, another person familiar with the matter said. A consortium of multiple entities is likely to win the bid, one of the people said.
A deal hadn’t been reached at the time of publishing, and existing prospective investors may still not end up forging the investment, people familiar with the situation cautioned.
Bank of Baroda, Multiples and Premji Invest didn’t respond to a request for comment. MobiKwik and Zerodha declined to comment.
The investment talks come as the Reserve Bank of India evaluates permitting external investors back a handful of lenders. Accel and Quona last year backed Shivalik Bank and fintech unicorn Slice said this week that it had received the approval from the central bank to merge with North East Small Finance Bank.
Two high-profile venture investors told TechCrunch on the condition of anonymity that VCs and PEs are hunting for deals with banks partly as a hedge against their fintech investments following growing regulatory scrutiny on younger financial services firms.
The story was updated with information about MobiKwik’s involvement.