Sumitomo Mitsui Financial Group (SMFG), Japan’s second largest lender, is acquiring a 74.9 per cent stake in Fullerton India Credit Company (FICC) for $2 billion.
A non-banking finance company (NBFC), Fullerton India, provides personal loans, business loans, loans against property, vehicle loans and housing finance among others.
FICC started its India operations in 2007 and has established a presence across 600 towns and more than 58,000 villages through 629 branches and over 13,000 employees offering lending products to 2.3 million retail and small business borrowers.
It is an wholly owned subsidiary of Fullerton Financial Holdings Pte Ltd (FFH), which in turn is a wholly owned subsidiary of Temasek Holdings Pte Ltd, Singapore.
SMFG and FFH on Tuesday reached an agreement wherein SMFG will acquire a 74.9 per cent stake in FICC from FFH, subject to regulatory approvals. SMFG will eventually acquire 100 per cent of FICC, a press statement from Fullerton India said. Though it was silent on the deal, it is understood that Sumitomo will pay $2 billion for the 74.9 per cent stake and another $500 million for the additional purchase.
The investment will combine SMFG’s Asian push towards consumer and MSME lending with FICC’s expertise in serving mass-market consumers and MSME customers in India.
“We are pleased to partner FFH and jointly accelerate FICC’s growth strategy. India is one of our focus markets ...where we want to build a deeper presence. As a long-term investor, we believe that the FICC platform’s innate strengths of multi-product focus and pan-India distribution will enable us to build a comprehensive financial service offering in India,’’ said Jun Ohta, president & group CEO of SMFG, said.
Fullerton India Home Finance Company Ltd (Grihashakti) will continue to be a wholly-owned subsidiary of FICC.
Citigroup, Cyril Amarchand Mangaldas, Allen & Overy were financial and legal advisers to FFH, while JP Morgan, Anderson Mori & Tomotsune were financial and legal advisers to SMFG.
