Axis Bank is in discussions with the limited partners (LPs) of its Rs 600 crore private equity fund for a suitable way forward as the third largest private sector lender wants to exit the PE fund, said Shikha Sharma, MD & CEO, Axis Bank on Thursday.
“We are in talks with the LPs. The PE fund business is not one of our strategic business areas. There is no timeline for the exit to happen. It could be three, six or even more than 12 months before a decision is reached. We want the LPs to be comfortable with the new promoters who will be coming in,” she said on the sidelines of the launch of its first urban financial inclusion initiative in Bangalore.
Although Sharma did not disclose the name of the LPs, she said the PE fund is doing well with a professional team on board. Responding to whether Axis Bank is comfortable with the present management of the PE fund buying out the stake, Sharma said: “We are not closed to that option. We will keep the interests of our LPs before taking any decision on this matter.”
In October 2006, the bank set up Axis Private Equity, primarily to carry on the activities of managing equity investments and provide venture capital support to businesses. Axis PE is a wholly-owned subsidiary where Axis Bank held 1.5 crore shares, as per its latest annual report.
The PE arm of Axis raised Rs 600 crore through its first fund, the Axis Infrastructure Fund, in 2008. By July 2008, the fund had already invested a combined nearly Rs 300 crore in three firms.
Elaborating on the need to move away from the PE fund, Sharma said the bank is focusing on areas such as small and medium enterprises (SME) and retail. She expects the bank to record over 20 per cent in credit growth this year and anticipates net interest margins (NIM) to fall for the coming few quarters and stabilise in the 3.25-3.5 per cent range, the historical range for the bank.
Axis Bank, which wants to be an India-focused bank, is planning to convert its representative office in Shanghai to a branch office. “We have rep offices in Hong Kong, Dubai, Singapore and Shanghai. The idea is to serve the international needs of our domestic customers when they go abroad,” said Sharma.
Source: Economic Times