Punjab National Bank (PNB), a PSU lender, has sold its entire stake in Asset Reconstruction Company (India) (ARCIL) to Avenue India Resurgence Pte, a subsidiary of Avenue Capital Group, a global investment firm headquartered in New York. The stake sale comprised 10.01% or 3.25 crore shares and was completed in cash, although the bank did not disclose the deal’s value.
With the divestment’s completion, PNB is no longer a sponsor of ARCIL, as its shareholding has become zero after the sale, according to a regulatory filing made by the PSU bank on Wednesday. PNB stated in a BSE filing that “in compliance with RBI guidelines, the bank has sold its entire shareholding in Asset Reconstruction Company (India) Ltd. (ARCIL) to Avenue India Resurgence Pte. Ltd. on March 29, 2023, and has ceased to be a sponsor in ARCIL.”
ARCIL, established in 2002, is India’s first and among the country’s leading asset reconstruction companies (ARCs), having resolved over ₹78,000 crore worth of non-performing assets (NPAs) acquired from Indian banks and financial institutions since its inception. Headquartered in Mumbai, the company is sponsored by prominent banks and financial institutions such as Avenue India Resurgence, State Bank of India (SBI), and PNB.
In the fiscal year FY22, ARCIL recorded a total income of ₹3.04 crore, up from ₹1.73 crores and ₹1.66 crores in FY21 and FY20, respectively. The company also reported consistent growth in revenue from operations, which stood at ₹3.02 crore, ₹1.70 crore, and ₹1.63 crores in FY22, FY21, and FY20, respectively.
PNB sold its stake in ARCIL to comply with the Reserve Bank of India’s (RBI) revised norms on investment in ARCs by banks. The central bank has determined that a bank can sponsor only one ARC at a time, and its stake in other ARCs should be less than 10% of the paid-up equity capital of the company. PNB, along with SIDBI and Bank of Baroda, is a sponsor of India SME Asset Reconstruction. As per the bank’s annual report for 2021-22, the ARC is its associate company.
In November last year, the government approved the divestment of PNB’s entire stake in UTI Asset Management Company. The PSU bank, which owned a 15.22% stake in UTI AMC, proposed to sell its total stake in the mutual fund company in single or multiple tranches for the realization of gains on investment. The UTI AMC’s valuation was estimated to be around ₹1,329 crores. The move was part of the state-owned lender’s strategy to reduce its non-core assets to bolster its capital base.
PNB’s shares ended the trading day on Wednesday with a 2.87% increase, reaching a value of ₹46.21 on the Bombay Stock Exchange.