ICICI Group may hike stake in licensed payment bank FINO PayTech

ICICI Group may hike stake in licensed payment bank FINO PayTech

Newly-licensed payment bank FINO PayTech will raise fresh funds from domestic institutional investors as it prepares to face competition from nimble rivals such as Paytm and reduce foreign shareholding in the company to comply with RBI regulations.

As a result, ICICI Group, which owns around 16% in the company, is likely to increase its stake through ICICI Lombard General Insurance and will also be the partner bank for FINO's new venture, FINO's MD & CEO Rishi Gupta said in an interview.

Both companies are now working on how the partnership will pan out. "ICICI owns nearly 16% in our company and they are ready to take a higher stake if there's a need. They have a window to raise stake," Gupta said, adding, "ICICI Bank will become our partner bank -that is more or less closed now. We are working on the modalities of what a partner bank's role and responsibilities will be."

"We are open to increasing stake in FINO but there is no definite plan," ICICI said in reply to a query . "We will be working with them as they transition into a payments bank.We are open to exploring all possible areas of synergy ," a spokesperson said.

FINO has also sought some clarifications from RBI on how the relationship with the partner bank with regard to KYC and other things will work, Gupta said. Foreign shareholding in FINO currently stands at 70%. ICICI Bank's stake is classified as a foreign entity , so ICICI Lombard is most likely to increase its stake on behalf of the group. Foreign investors Headland Capital Partners (15%), International Finance Corp (10%), Intel Capital (10%) and Blackstone (10%) will see their stake shrink after the issue. The company has to reduce foreign shareholding by at least 21% to meet RBI's eligibility of 49% limit set for payment banks. FINO will raise 400-500 crore in a single tranche.

JM Financial is the banker for the share sale while KPMG is helping the company in its rollout plan, risk control and technology . IFC-CGAP is helping with strategy , Gupta said.

"We are talking to 7-8 people from a larger chunk perspective, who can pick up 40-50% of the requirement like an anchor investor. Money raised will be used for technology , branding and new risk solutions and will last us till we break even," Rishi said, adding that banks, insurance, technology , retail and non-banking finance companies are showing interest in picking up stake.

Source :BankingUpdates