Mumbai: A day after expressing its intention to acquire a minority stake in Indian financial entities, the Hong Kong and Shanghai Banking Corporation (HSBC) is to pick up 20.08 per cent stake in Unit Trust of India (UTI) Bank from CDC for Rs 418 crore.

HSBC Asia Pacific Holdings (UK), a wholly owned subsidiary of HSBC, has entered into an agreement to acquire 14.71 per cent stake in UTI Bank from CDC Financial Services (Mauritius) Ltd and South Asia Regional Fund for Rs 306 crore ($ 66.42 million), HSBC said in a release last night (Dec 2, 2003).

In addition, HSBC would have the option to acquire an additional 5.37 per cent stake from CDC Financial Services (Mauritius) Ltd for Rs 112 crore ($ 24.26 million).

HSBC would also be making an open offer to buy at least additional 20 per cent stake in the private sector bank at Rs 90 per share in accordance with Securities Exchange Board of India's (SEBI) takeover regulations, it added.

HSBC chairman David Eldon said, "This is an investment in a well managed local financial institution, which will allow us to participate more fully in the fast growing financial sector in India. We have had a long history in India of over 150 years and with this new investment, we aim to strengthen our presence in this dynamically growing economy."

The foreign bank said the agreement and open offer are subject to regulatory and other approvals and are expected to be completed by April, 2004.

UTI Bank, which has 200 branches and extension counters and over 1,000 ATMs, had made a private placement of 26 per cent to CDC in September 2001, however, post the rights issue, the shareholding got diluted.

According to shareholding pattern as on September 30, 2003, available on UTI Bank website, the promoters, administrator of the specified undertaking of UTI holding was 33.46 per cent while 13.5 per cent and 7.39 per cent vests with co-promoters Life Insurance Corporation of India (LIC) and GIC and its subsidiaries.

HSBC CEO designate Michael Smith, had on Monday said that as part of a five-year growth strategy, India has been identified as a major centre along with China, Korea and Taiwan and HSBC intended to pick smaller stakes.

UTI Bank scrip yesterday recorded a rise of Rs 9.55 on Bombay Stock Exchange (BSE) to end the day at Rs 95.1 while on NSE, it closed at Rs 95.8 as against Monday's close of Rs 85.65.

PTI