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SBI plans $1bn private equity fund

The move signals an attempt to pursue new business opportunities, which can bolster the bank’s revenues, reports Suprotip Ghosh.

business Updated: Jun 27, 2007 21:54 IST
Suprotip Ghosh
Suprotip Ghosh
Hindustan Times

State Bank of India is planning to launch a private equity fund with a corpus of $1 billion (Rs 4,100 crore). The move signals an attempt to pursue new business opportunities, which can bolster the bank’s revenues.

State Bank of India bid for shares worth $1 billion in ICICI Bank’s recently concluded follow-on public offering.

State Bank of India was expanding its existing private equity business, said a senior bank executive on the sidelines of a seminar in Mumbai. “We are launching a $1 billion fund,” he added.

The country’s largest public sector bank is keen on investing in small real estate and construction companies. “There are not too many funds keen on investing in small-ticket real estate players. We are planning to plug this gap,” the executive said.

State Bank of India move is perceived as an attempt to take advantage of the rapid growth in several sectors. Overseas private equity funds have made substantial investments in small and mid-cap companies in India. ICICI Ventures is an example of a local institution seizing opportunities in the private equity space. It has funded many start-ups and other promising ventures. Many private as well as private sector banks are exploring this area.

State Bank of India is also planning a major foray into the custodian business. This is mainly to ensure that foreign investors get their dividends and other security-related earnings. Only foreign banks are currently engaged in this activity.

The bank, which is expanding its wealth management business, is training 500 people at its various offices in different regions. “We are planning to train 1,500 officers in an attempt to transform the wealth management services to portfolio management business,” the executive added.

First Published: Jun 27, 2007 21:49 IST