Sumitomo Mitsui Financial Group (SMFG) on Tuesday entered the country’s retail financing industry by acquiring 74.9% in Fullerton India Credit Company in a deal that, investment banking sources told ET, cost Japan’s second biggest lender about $2 billion.
“India is one of our focus markets... We believe in its high growth potential and want to build a deeper presence,” said Jun Ohta, president and group chief executive, Sumitomo Mitsui Financial Group.
“We intend to leverage our expertise in the Japan market as well as the capabilities of our franchises across key emerging Asian markets.”
Sumitomo will eventually acquire 100% in Fullerton India Credit. The transaction is subject to regulatory approvals.
SMFG is one of Japan’s largest financial services groups. Fullerton Financial Holdings, which controls the Indian operations, is a wholly-owned unit of Singapore state investment fund Temasek Holdings Pte.
The deal comes at a time when retail credit in India is at an inflection point.
India’s most valued banks and non-bank lenders – HDFC Bank, Kotak Mahindra Bank, Bajaj Finance and Bajaj Finserv, for instance – have leveraged the retail theme, tapping into opportunities provided by millions of consumers who are stepping on to the consumption ladder to buy gadgets, vacations, cars or homes.
As part of the transaction, Fullerton India Home Finance, a housing finance company, will continue to be a wholly owned subsidiary of Fullerton India Credit.
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