Japanese lender Sumitomo Mitsui Financial Group (SMFG) has picked a 74.9% stake in non-banking financial company Fullerton India Credit Company in a deal worth around $2bn.
SMFG will eventually buy the remaining stake in the Indian firm.
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The deal, which awaits regulatory nod, will help the Japanese bank gain a retail finance platform in India.
It calls the move “essential for the expansion of its Asia franchise”, adding that it “will strive to contribute to further develop India’s financial industry as a whole”.
Part of Temasek-owned Fullerton Financial Holdings, Fullerton India will now be a consolidated subsidiary of SMFG.
Fullerton India provides unsecured loans and loans against property, offering services in the urban and rural areas and through online channels.
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By GlobalDataIt predominantly serves SMEs, self employed as well as mass-market customers.
The business has over 650 branches across India and a workforce of around 14,000.
The transaction aligns with SMFG’s goal to deepen its franchise in Asia.
The bank said that the goal is in “accordance with its Medium-term Business Plan covering the three-year period starting FY2020.”
It plans to deepen its presence in other Asian markets through ‘inorganic means’.
The focus is to capture long term economic growth in the Philippines, Vietnam, Indonesia as well as India.
This April, SMBC Consumer Finance (SMBCCF), a consolidated subsidiary of SMFG, signed an agreement to acquire a 49% equity stake in Vietnam’s VPBank Finance Company (FE Credit).
FE Credit is a wholly-owned subsidiary of Vietnam Prosperity Joint Stock Commercial Bank (VP Bank). It mainly provides cash loan and credit card services to retail customers
Last month, SMFG said that it will buy a stake of around 5% in Rizal Commercial Banking Corporation, a Filipino commercial banking group, for over $90m.
