The country's largest lender, State Bank of India, has bought back a nearly 13.84 per cent stake in its investment banking arm, SBI Capital Markets, from the Asian Development Bank for an undisclosed amount.
The transaction makes SBI Caps a wholly-owned subsidiary of SBI.
ADB, which bought the stake in 1997, decided to exit as it wanted to invest in "other development activities and ventures" in the country and felt that it has achieved its initial goal of "giving a fillip" to the local firm, SBI Caps Managing Director and CEO S Vishvanathan said.
"ADB sold its stake to State Bank in March as it wanted to invest in other development activities. The deal has made SBI Cap as the wholly-owned subsidiary of State Bank," Visvanathan told PTI in Mumbai, but declined to divulge the valuation amount.
According to a senior official with the State Bank Group, SBI paid a hefty premium for ADB's stake. It decided to buyback the shares as ADB's holding contributed "hardly any value" to the company any more, as the agency had achieved its investment goal in SBI Caps.
Asked whether SBI plans to sell the stake to another partner, the official said SBI is unlikely to look for another partner in the near future and is likely to keep the entity as a wholly-owned subsidiary of the bank.