Billionaire Hindujas Boost IndusInd Collateral on Share Drop
They topped up collateral to 45% of their stake after IndusInd’s shares fell 20% from the date of the pledge to an April low.
(Bloomberg) -- The billionaire Hinduja family pledged more of their stake in IndusInd Bank Ltd. to avoid triggering a covenant breach last quarter, according to people with knowledge of the matter, a renewed source of concern given they had to step in to repay such a loan following a market rout last year.
IndusInd founders led by brothers Srichand and Gopichand Hinduja had raised about $300 million in February by pledging about 36% of their stake in the Mumbai-listed bank, the people said, asking not to be identified as the reasons for the pledge aren’t public. They topped up collateral to 45% of their stake after IndusInd’s shares fell about 20% from the date of the pledge to an April low, the people added.
The Hindujas, who have repeatedly been borrowing money against the bank’s shares, had to repay debt last year after a broader market rout, and sought extensions to convert warrants into equity. The family also paid a premium to boost its stake in IndusInd Bank in February in a sign of confidence for the lender.
The most recent pledge made by IndusInd International and IndusInd Ltd., which represent the Hinduja family, is equal to almost half of their 15.19% stake in the bank, according to an exchange filing. That’s about 53.4 million shares worth 53.4 billion rupees ($727 million) at Wednesday’s price. The shares closed more than 1% lower in Mumbai trading in line with the broader banking gauge.
“The pledge could be marginally negative for the stock as it is a reasonably large chunk, but not alarming,” said Jyoti Roy, deputy vice president at Angel Broking. “The bank’s asset quality has improved in the last quarter.”
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IndusInd Bank has gained 12% this year, lagging the broader Nifty 50 gauge. It was the worst-performer on India’s Bankex index last year, losing more than 40% of its value.
The family was using the loan from Barclays Plc and Deutsche Bank AG to fund its offshore business and refinance debt, the people said. Representatives for the Hindujas, Barclays and Deutsche Bank declined to comment.
The family, with businesses across 38 countries ranging from trucks to banking to technology, has been selling some assets, including Hinduja Global’s healthcare outsourcing business to Baring Private Equity for $1.2 billion. They have a combined fortune of about $17 billion, according to the Bloomberg Billionaires Index.
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