Mumbai: Diversified Japanese conglomerate Sumitomo Mitsui Financial Group on Tuesday inked an agreement with Singapore-based Fullerton Financial Services Holdings to acquire its non-banking arm Fullerton India Credit Company in a reported USD 2.5 billion deal.
Fullerton Financial Services is a fully-owned subsidiary of Singaporean investment giant Temasek Holdings.
The Japanese acquirer did not disclose the deal value in the public statement, but market sources told PTI that Sumitomo will pay around USD 2 billion for the 74.9 per cent stake it is buying in the first leg of the two-legged deal, and another USD 500 million-plus for the remaining stake to take the ownership to 100 per cent.
At the current exchange rate, the deal value is about Rs 18,550 crore.
Fullerton India Credit Company is a non-banking lender and is wholly owned by Fullerton Holdings.
It started India operations in 2007 and has since grown across 600 towns and over 58,000 villages with 629 branches and employs over 13,000 and serves 2.3 million retail and small business borrowers.
The two-legged deal involves Sumitomo buying 74.9 per cent in the Mumbai-based Fullerton India Credit Company -- subject to regulatory approvals -- and later the remaining stake, Sumitomo and Fullerton said in a joint statement.
Sumitomo said the acquisition will help it participate in India's long-term growth story on one hand and on the other help it strengthen its digital reach across Asia.
Sumitomo Mitsui Financial Group Inc today entered into an agreement with Fullerton Financial Holdings of Singapore to acquire a 74.9 per cent stake in Fullerton India Credit Company, subject to regulatory approvals. Sumitomo will eventually acquire 100 per cent of Fullerton Credit, the Japanese giant and Singaporean owners said in the statement.
This investment brings together our Asian push towards consumer and MSME lending, with Fullerton's expertise in serving mass-market consumers and MSME customers in India.
We expect the deal to help strengthen our medium-term objective of widening our digital reach in Asia as envisaged in our three-year business plan beginning FY2020, Jun Ohta, president & group chief executive of Sumitomo Mitsui Financial Group was quoted as saying in the statement.
Currently, Sumitomo has a subsidiary in Indonesia and the Fullerton deal will help it widen the same into India and then the rest of Asia, which means that the company is on the lookout for more inorganic opportunities elsewhere in the continent.
Fullerton Financial Holding, fully owned by Temasek, has 3.85 per cent of Fullerton Credit, while Angelica Investments, a fully-owned arm of Fullerton Holding, owns the remaining 96.1 per cent.
Transaction reaffirms the strength of Fullerton's platform underpinned high corporate governance, risk management, prudent liquidity management, agile technology, and advanced analytics. Sumitomo and Fullerton will work together on the next leg of growth of Fullerton Credit, Ohta said.