SBI in talks with SBI Caps to sell shares via block deals
A source said banks would be able to sell shares to recover their dues in the ongoing quarter
Indian lenders, led by State Bank of India, have initiated talks with SBI Caps to sell Vijay Mallya-owned shares in United Breweries. Mallya’s 16.15 per cent stake in the UB group is valued at Rs 5,500 crore and will be sold via block deals.
Earlier in the week, the Prevention of Money Laundering Act (PMLA) court in Mumbai had restored properties seized by the Enforcement Directorate (ED) from Mallya to banks that had granted loans to the fugitive businessman. The ED had seized assets worth Rs 9,000 crore from the former UB group chairman in connection with money laundering.
Mallya has been facing the ED probe after Kingfisher Airlines, owned by him, defaulted on bank loans. While the ED and the CBI were investigating the matter, Mallya left the country.
A source said banks would be able to sell shares to recover their dues in the ongoing quarter. In the past, Mallya had said that he made several offers to banks to settle the matter and that the ball was in the lenders’ court.
The PMLA court said in case Mallya was found non-guilty later, the banks would have to restore the properties back to Mallya after recovering their dues. The banks had earlier moved the Debt Recovery Tribunal in Bengalauru, which had allowed banks to sell Mallya’s properties. The ED, which had attached these properties including stakes in UB group companies, had objected to the sale and moved the PMLA court in Delhi.
When contacted, a senior public sector bank executive said the recent London court verdict would also help in recoveries. Although provisions against exposure have been made in line with regulatory norms in the past, the public money is at stake, he said. “Banks will like to recover dues from Mallya as soon as possible,” he said.
Mallya’s stake in various companies (which was kept as collateral with the banks) would be sold through block deals to get better value. “SBI Capital markets would be acting as a bridge between us (lenders) and prospective buyers of these holdings,” the official said. A consortium of Indian lenders on May 18 moved a step closer in their attempt to recover dues after the High Court in London upheld an application to amend their bankruptcy petition, in favour of waiving their security over his assets in India.
Vijay Mallya’s run-ins with lenders began after the collapse of now defunct Kingfisher Airlines, over a decade ago. In 2013, a consortium of banks, including the SBI, had asked for a payment of over Rs 6,000 crore in loans for Kingfisher Airlines.
The interest on loans accumulated with total dues crossing over Rs 9,000 crore (2016).
In 2014, public sector lender United Bank of India called Mallya a ‘wilful defaulter’. Other lenders like SBI followed suit.
Mallya left the country on March 2, 2016, the day banks moved the Debt Recovery Tribunal against him. In January 2019, he was declared a fugitive economic offender under the Fugitive Economic Offenders Act.