Banking on Growth: Japan’s Sumitomo Mitsui To Buy Stake in ADAG’s Reliance Capital
Banking on Growth: Japan’s Sumitomo Mitsui To Buy Stake in ADAG’s Reliance Capital
Japanese Bank Sumitomo Mitsui is set to acquire a 2.77% stake in ADAG Financial Services Company Reliance Capital for INR 371 crore. Reliance Capital is a non-banking finance company which is involved in lending as well as asset management and insurance. It intends to start a bank with the support of the Japanese financial bank.
Strategic Investment
The firm has termed the investment of Sumitomo Mitsui as a strategic one. The Japanese bank will also have a one year lock in period for its investment in Reliance Capital. The investment has been made at INR 530 per share at a premium of slightly more than 11% of the stock price on the concerned relevant date of Reliance Capital, according to a statement issued by the company.
The deal values Reliance Capital close to INR 13,400 crore as against market capitalisation of INR 12,216 crore associated with the closing price of the stock on Wednesday.
About Sumitomo Mitsui Bank
Sumitomo Mitsui Bank is currently the fourth largest in Japan as judged by market capitalisation plus corporate loans. With managing assets of USD 682 billion with assets as per the custody of USD 1.8 trillion as on September, it is the largest financial institution.
“Reliance Capital intends to establish a new bank in India with support of Sumitomo Mitsui Trust Bank as a strategic partner as and when the Reserve Bank of India (RBI)’s policies permit formation of the same,” the statement issued by the company said.
Win-Win Situation
As per the company, Reliance Capital will provide support for clients of Sumitomo Mitsui Trust Bank in supply-chain financing as well as advisory services in the nation. Sumitomo Mitsui Trust Bank will provide support for Reliance Group via numerous listed group companies through wide range of financial as well as theory services in Japan and the Asia-Pacific region.
“Sumitomo Mitsui Trust Bank and Reliance Capital will collaborate in providing solutions for their clients, including in the area of M&A [mergers and acquisitions] opportunities in India and Japan, and will assist each other in distribution of their respective financial products through their networks,” the statement officially said.
“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”, Anil Ambani, chairman of the ADAG Reliance group was quoted as saying.
“We are particularly delighted to collaborate on a number of business initiatives that are proposed, and thereby contribute toward the development of the Indian financial industry through our collaboration with Reliance Capital, which we believe will be a very successful one,” Hitoshi Tsunekage, president of Sumitomo Mitsui Trust Bank also added.
The 2 companies will also collaborate in provision solutions for their clients across a wide range including sectors such as mergers and acquisitions in India as well as Japan. Both firms will assist each other in distribution of concerned financial products via their networks.
