Reliance Cap ropes in Japanese bank as partner
Firming up its plans to set up a bank, Anil Ambani-led Reliance Capital on Thursday roped in Japan’s Sumitomo Mitsui Trust Bank (SMTB) as a strategic partner and minority investor to collaborate on various businesses, including its proposed banking venture.business Updated: Dec 26, 2014 04:13 IST
Firming up its plans to set up a bank, Anil Ambani-led Reliance Capital on Thursday roped in Japan’s Sumitomo Mitsui Trust Bank (SMTB) as a strategic partner and minority investor to collaborate on various businesses, including its proposed banking venture.
SMTB will initially acquire 2.77% stake in Reliance Capital for $58.4 million (Rs 371 crore) through a preferential allotment of shares. The acquisition, at Rs 530 per share, represents an 11% premium to the stock price of relevant date of Reliance Capital. The company’s shares closed with a gain of 3.7% to Rs 497.35 on the Bombay Stock Exchange on Wednesday.The acquisition will have a one-year lock-in period.
“Reliance Capital intends to establish a new bank in India, with support of Sumitomo Mitsui Trust Bank as a strategic partner, as and when RBI policies permit formation of the same,” the company said in a statement.
SMTB is Japan’s fourth-largest bank in terms of market value and corporate loans, and manages assets worth $682 billion and assets under custody of $1.8 trillion as of September 2014.
Reliance Capital and SMTB will advise clients in areas such as mergers and acquisition opportunities in India and Japan and assist each other in distributing their respective financial products through each other’s networks, Reliance Capital said.
Sumitomo will also help Reliance Capital to set up a commercial bank when the latter gets the relevant licence from the Reserve Bank of India (RBI).
“We believe Sumitomo Mitsui Trust will play an important role in the future of our company, through their all-round support and long-standing experience, and will help accelerate our growth as we tap new opportunities and expand our existing businesses,” Reliance Group chairman Anil Ambani said.
“We are particularly delighted to collaborate on a number of business initiatives that are proposed, and thereby contribute towards the development of the Indian financial industry,” SMTB president Hitoshi Tsunekage said.
Several companies have shown interest to set up banks. Earlier this year, RBI granted licences to IDFC and Bandhan Financial Services to set up full-fledged banks.
This is Reliance Capital’s second major deal with a Japanese company. In November, Nippon Life Insurance announced plans to raise stake in Reliance Capital Asset Management to 49% from 26% in multiple tranches. As part of the deal, Nippon Life said it would invest Rs 657 crore in the first tranche for an additional 9% stake. Nippon had acquired the 26% stake for Rs 1,450 crore in 2012. Nippon also holds a 26% stake in Reliance Life Insurance.
Reliance Capital last month reported a 20% year-on-year rise in net profit to Rs 217 crore during the July-September quarter, aided by a robust growth in mutual fund, commercial finance and general insurance businesses.