Mumbai, Dec 25 (IANS) Anil Ambani-led Reliance Capital has roped in Sumitomo Mitsui Trust Bank, Japan’s fourth largest, as a strategic partner and a minority investor, besides an assurance to get its support when India’s central bank issues it a commercial banking licence.
The Japanese financial powerhouse will be acquiring a 2.77-percent stake in Reliance Capital for Rs.371 crore by way of a preferential allotment, Reliance Capital said in a statement Thursday, adding that the issue price of Rs.530 per share represents a 11-percent premium.
The acquisition will have a one-year lock-in period.
This apart, Sumitomo will also help Reliance Capital to set up a commercial bank as a strategic partner when the latter gets a licence from the Reserve Bank of India. Reliance Capital in turn will advise Sumitomo’s global clients, notably on mergers and funding opportunities in India.
“We wholeheartedly welcome Sumitomo Mitsui Trust as our strategic partner in Reliance Capital,” Reliance Group chairman Anil Ambani said in a statement, announcing the signing of their major collaboration agreement.
“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.”
Besides being Japan’s fourth largest bank in terms of market capitalisation, the Sumitomo Mitsui Trust Group is also Japan’s largest financial institution managing assets of $ 682 billion with assets under custody of $1.8 trillion as of September 2014, the statement said.
“We are particularly delighted to collaborate on a large number of business initiatives that are proposed and thereby contribute toward the development of the Indian financial industry through our collaboration,” said Hitoshi Tsunekage, president of Sumitomo Mitsui Trust Bank.
Japanese collaborations are not new to Reliance Capital.
Late last month, the company announced that Nippon Life had decided to increase its stake in the asset management company of Reliance Capital to 49 percent from 26 percent then, taking its valuation to $1.2 billion.
In the first tranche, Nippon was to invest of a little over $100 million for a 9-percent stake.
Nippon Life was already a strategic partner in the Reliance asset management arm, by acquiring a 26-percent stake for $240 million) in 2012. This had pegged the valuation of the asset management company at $920 million.
The Japanese giant is also said to be keen to hike its stake in Reliance Life Insurance venture to 49 percent from 26 percent, as and when India notifies the decision of higher foreign equity cap in the sector and comes up with the norms.