Bank of Maharashtra - Privatisation Likely This Year?

Bank of Maharashtra (BoM) saw Twin corporate developments in last couple of weeks. On 27-8 21, MD & CEO of BoM, Mr. A.S. Rajeev, was given an extension of 2 years, or until further orders, whichever is earlier, from his current term, which expires on 1-12-2021. Maybe, to enable him to complete stake sale process, as he was heading BoM from 1-12-18, and seen instrumental in turning around financials of BoM.

In second move, Mr. Lalit Kumar Chandel was appointed as Govt Nominee Director, until further orders. Mr Chandel is seen having rich experience of Banking, Insurance, Capital Markets, External Assistance, Rural Development, Power, Irrigation and Health. Both these moves are seen to extract optimum value, on strategic sale. It is also said that necessary amendments in Banking Laws, to effect PSU Bank stake sale, will be carried out in coming Winter session in December, 21, which will get passed in both Houses in next couple of days, with 3 months seen available with the Govt for strategic sale. BoM has also all the financials in place, including compliances of  FY21 accounts adoption, Q1FY22 numbers approved , QIP of desired levels having concluded etc.

QIP of Rs. 404 cr, made by the Bank on 17-7-21, (of 17.03 cr shares at Rs. 23.70 per share) 50% of this, being 8.52 cr shares were allotted to LIC, while remaining 50% being 8.51 cr shares to 7 PSU Banks. Post this QIP. GoI is holding 90.97%, with 4.62% held by the institutional investors. Govt is determined to monetize stake taken by LIC as QIP in few PSUs, in last 6 months, as LIC will also get listed by March 22.

Cash volume seen yesterday of 80 lakh shares, which is over 3x of last 2 week average, also indicate informed buying, as there can not be smoke without fire.

So, strategic stake sale in BoM looks almost certain, with timeline seen in last quarter of FY 22.
So, patience is likely to get rewarded in a BIG way, those holding shares in BoM.

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