Citax Holdings is one of the top investors in Yes Bank's $2 billion fundraise and has offered to invest $500 million in the Ravneet Gill-led bank. Indian private banks present compelling investment opportunities and there is a good prospect of growth, Srinivas Solaraj, executive chairman, Citax Holdings, told CNBC-TV18's Nisha Poddar in an exclusive interview.
Solaraj has also talked about their future plans for investing in India, apart from Yes Bank. Here are the edited excerpts of the interview:
Q: Your rationale for a big investment in an Indian bank—Yes Bank?
A: Within the financial services globally, an Indian private sector bank is the most compelling investment opportunity we have today. Yes Bank is very young and there is a good prospect for growth. With Yes Bank particularly, I think it has got great products, people and technology and there is a huge opportunity for growth.
Q: Have you had any investments globally when it comes to the banking space and what is the kind of expertise that you can bring to the table on this?
A: We are currently starting as a passive investor, as a strategic investment. We are currently a small shareholder in a private bank in Switzerland and we plan to expand in the financial services space shortly. In fact for that matter, we are now currently in discussion to take an equity in an AIF - alternative investment finance and Gurudeo Yadwadkar, deputy managing director of IDBI, is going to be handling our India operations. Yadwadkar is a credible professional and we have identified an established team to head the financial services space in India.
Also Read: YES Bank investors SPGP Holdings, Erwin Braich confident of RBI nod, commit $3 billion investment in India
Q: When we talk about your global footprint, what is the kind of fund that you have and the assets under management for Citax?
A: We have done fundraising exercise for past 15 months, we have $3 billion, of that very substantial one is committed for an oil refinery in North Africa and probably one-third of that is going to be in the financial services space in India of that.
Q: Apart from that what are your top investments globally, I am just trying to gauge your expertise and in which sectors?
A: Our expertise is in oil and gas side and we have a commitment of close to $2.5 billion in North African refinery space, it is in final stages, we are waiting for a court, it is in the bankruptcy process. The court has given a principle approval, we have just completed compulsory due diligence. In the next 45 days, we will be completing the takeover.
Q: You said that you have just finished raising one particular fund and a large part of that could also come into India. Overall how much assets under management do you have globally presently?
A: Currently, the AUM is $1.3 billion.
Q: You said largely in the oil and gas space. When we talk about Yes Bank, the CEO has communicated that the deal could be done at a price of Rs 78 per share, which is as per the Sebi formula of six month’s average. Would you be comfortable with this valuation? Is that the price which you have been discussing with the bank?
A: I guess we have no room as pricing is determined by Sebi regulation and I guess all the investors will have to abide by that if my understanding is correct.
Q: Since this is a private bank, the RBI takes the final call on who invests in which bank and 'Fit and Proper' certificate has to be really sought and taken by the investors and the bank as well. Now, how confident are you of getting the RBI’s 'Fit and Proper' certificate for your investment in Yes Bank?
A: I don’t think we will have any issues in that, the reason is we have been approved by regulators in the EU, when I say that I personally started my financial services career as a hedge fund trader in Switzerland and we are also a shareholder in regulated banks currently. I don’t think we will have any issue in getting approval through of RBI of 'Fit and Proper'.
Q: When we talk about the overall agreement with the bank is it binding in nature when it comes to your term sheet with the bank and under what circumstances can you pull out of this transaction and at what cost?
A: As of today, the commitment is binding. We have no intention to pull out. The reason is that we have taken a consolidated decision in past two years looking at the market space in India I don’t think we will pull out subject to regulatory approval, we are committed to Indian financial services by now.
Q: What are the type of investors that you tap for your fund?
A: As of today, we have raised capital of $3 billion from ultra-high net worth investors from Switzerland and Germany. The reason is, as you are aware, the return on capital in Europe is negative today, they are looking at developing and emerging market sectors. So we have done our fundraising exercise in 15 months and we have been successful in raising the capital. We have committed capital of first round of $3 billion as of today.
Solaraj has also talked about their future plans for investing in India, apart from Yes Bank. Here are the edited excerpts of the interview:
Q: Your rationale for a big investment in an Indian bank—Yes Bank?
A: Within the financial services globally, an Indian private sector bank is the most compelling investment opportunity we have today. Yes Bank is very young and there is a good prospect for growth. With Yes Bank particularly, I think it has got great products, people and technology and there is a huge opportunity for growth.
Q: Have you had any investments globally when it comes to the banking space and what is the kind of expertise that you can bring to the table on this?
A: We are currently starting as a passive investor, as a strategic investment. We are currently a small shareholder in a private bank in Switzerland and we plan to expand in the financial services space shortly. In fact for that matter, we are now currently in discussion to take an equity in an AIF - alternative investment finance and Gurudeo Yadwadkar, deputy managing director of IDBI, is going to be handling our India operations. Yadwadkar is a credible professional and we have identified an established team to head the financial services space in India.
Also Read: YES Bank investors SPGP Holdings, Erwin Braich confident of RBI nod, commit $3 billion investment in India
Q: When we talk about your global footprint, what is the kind of fund that you have and the assets under management for Citax?
A: We have done fundraising exercise for past 15 months, we have $3 billion, of that very substantial one is committed for an oil refinery in North Africa and probably one-third of that is going to be in the financial services space in India of that.
Q: Apart from that what are your top investments globally, I am just trying to gauge your expertise and in which sectors?
A: Our expertise is in oil and gas side and we have a commitment of close to $2.5 billion in North African refinery space, it is in final stages, we are waiting for a court, it is in the bankruptcy process. The court has given a principle approval, we have just completed compulsory due diligence. In the next 45 days, we will be completing the takeover.
Q: You said that you have just finished raising one particular fund and a large part of that could also come into India. Overall how much assets under management do you have globally presently?
A: Currently, the AUM is $1.3 billion.
Q: You said largely in the oil and gas space. When we talk about Yes Bank, the CEO has communicated that the deal could be done at a price of Rs 78 per share, which is as per the Sebi formula of six month’s average. Would you be comfortable with this valuation? Is that the price which you have been discussing with the bank?
A: I guess we have no room as pricing is determined by Sebi regulation and I guess all the investors will have to abide by that if my understanding is correct.
Q: Since this is a private bank, the RBI takes the final call on who invests in which bank and 'Fit and Proper' certificate has to be really sought and taken by the investors and the bank as well. Now, how confident are you of getting the RBI’s 'Fit and Proper' certificate for your investment in Yes Bank?
A: I don’t think we will have any issues in that, the reason is we have been approved by regulators in the EU, when I say that I personally started my financial services career as a hedge fund trader in Switzerland and we are also a shareholder in regulated banks currently. I don’t think we will have any issue in getting approval through of RBI of 'Fit and Proper'.
Q: When we talk about the overall agreement with the bank is it binding in nature when it comes to your term sheet with the bank and under what circumstances can you pull out of this transaction and at what cost?
A: As of today, the commitment is binding. We have no intention to pull out. The reason is that we have taken a consolidated decision in past two years looking at the market space in India I don’t think we will pull out subject to regulatory approval, we are committed to Indian financial services by now.
Q: What are the type of investors that you tap for your fund?
A: As of today, we have raised capital of $3 billion from ultra-high net worth investors from Switzerland and Germany. The reason is, as you are aware, the return on capital in Europe is negative today, they are looking at developing and emerging market sectors. So we have done our fundraising exercise in 15 months and we have been successful in raising the capital. We have committed capital of first round of $3 billion as of today.
First Published: Dec 2, 2019 1:04 PM IST
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