BNP Paribas to buy 49.9 pc in Sundaram Home Finance
Of the total consideration, only Rs 146.98 crore will be paid to Sundaram Finance, reports BS Srinivasalu Reddy.business Updated: May 09, 2007 22:52 IST
Chennai-based Sundaram Finance, part of the TVS Group, on Wednesday broadened its alliance with BNP Paribas group by entering into an agreement to sell 49.90 per cent stake in its home finance arm to the latter’s mortgage finance subsidiary for about Rs 197 crore.
Sundaram Finance entered into an agreement with the Union de Credit pour le Batiment SA (UCB), a wholly-owned subsidiary of French banking conglomerate BNP Paribas SA, to sell 49.9 per cent stake in Sundaram Home Finance Ltd (SHF), the company said in a notice to stock exchanges.
Of the total consideration, only Rs 146.98 crore will be paid to Sundaram Finance and the remaining Rs 50 crore will be infused into SHF to boost its paid-up capital. Sundaram Finance will hold the majority 50.1 per cent stake in SHF after completion of the deal.
BNP has another joint venture with Sundaram Finance group with a 49.9 per cent stake in Sundaram BNP Paribas Mutual Fund in India.
Talking to Hindustan Times, TT Srinivasaraghavan, Managing Director of Sundaram Finance said, “The strategy is clear. UCB is a specialised mortgage finance company. We want to get their expertise and knowhow on mortgage.”
“After our fruitful JV with BNP Paribas in the AMC business, the banking group was very keen on this opportunity, paving the way for the initiative,” Srinivasaraghavan added.
UCB was created in 1951 by construction industry companies and several banks to help develop housing mortgages and introduce new financing techniques. It provides lending, depository and other financial services primarily to the building sector in addition to real estate loans to private borrowers. It consolidates 11 subsidiarie, six in France, three in Italy and one each in Britain and Spain.
Recently, BNP Paribas also announced it has picked up a 34.35 per cent stake in Geojit Financial Services. It also has a 26 per cent stake in SBI Life Insurance.