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FPIs increase stake in small and midcap banks

January 27, 2023

FPIs increase stake in small and midcap banks
Overseas investors were net sellers of India’s banking and financial services sector in eight out of 12 months in the previous calendar year pulling out ₹55,415 crore in net investments. While the outflow saw foreign portfolio investors’ (FPIs) stake in large private banks come down, they increased their stake in small private lenders during this period.

As per latest shareholding data, FPI stake in Yes bank saw the highest increase on a year-on-year (y-o-y) basis as of December. From 8.17 per cent in December 2021, FPI holding in Yes Bank went upto to 23.24 per cent as of December 2022. The spike in holding in Yes Bank is on account of private equity majors Carlyle and Advent picking up 9.99 per cent stake in Yes Bank for about ₹8,896 crore.  

In December, Yes Bank announced that it has allotted a total of 369.61 crore shares of face value ₹2 each and 255.97 share warrants convertible into equity shares of face value ₹2 each on a preferential basis to CA Basque Investments, a Carlyle Group entity, and Verventa Holdings Ltd , an Advent group entity. 

FPIs also increased their stake in IDFC First Bank to 19.76 per cent as of December 2022 from 14.77 per cent at the end of the same quarter in 2021. Foreign investor’s stake in Federal bank also went up by 2 per cent during this period.

“There is some kind of revival in the mid and small cap banks and that is why FPIs are increasing their position in these stocks,” said Kranthi Bathini, Director, Equity Strategy, WealthMills Securities.

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