He was in Delhi to sign a memorandum of understanding between Indian Infrastructure Finance Corporation Ltd (IIFCL) for a strategic partnership to cooperate on various aspects of infrastructure financing in India. SMBC will support infrastructure projects and also the fund raising needs of IIFCL to the tune of $5 billion over a 5-year period. He spoke to Ninad D Sheth on the banks India plans. Excerpts:
What is the purpose of the memorandum of understanding with IFCL
We are committed to funding big-ticket infrastructure projects in India. Through this MoU we will bring on board capital commitment to the tune of $5 billion for Indian core sector.
These will go into financing several mega infrastructure projects. India is now embanking on an ambitious expansion in its infrastructure and it is this that we are focusing on.
What are your plans for India besides this MoU
We are planning an entity presence through non-banking finance company in the near future in India. We believe that with greater financial de-regulation likely in 2008 the time will be mature for more investments.
However, we will clearly focus on the non-retail sector and mega projects in India. There is also a lot of action when it comes to assisting Japanese firms doing business in India this is likely to be a growth area for SMBC business in the near future since Japanese investments are growing at a rapid clip in India.
You have also been active in lead arranging India issues abroad.
Yes, we have lead arranged issues for Indian firms as well as multinational firms investing in India to the tune of $2 billion on global markets. We continue to be very active in the lead arranging business and see a lot of scope for providing capital in that area as Indian firms look for raising money abroad.
Are you likely to be active in private equity in India too
We are not directly looking at private equity activity in India.
However, we have major investments in Blackstone and Carlyle, two private equity firms that are active in India. So we do have an indirect interest in the private equity space in India.
What are the challenges of project finance in a country such as India
We take a long-term view. In India, obviously, the real impetus is coming from sustained growth of 9%. This creates growth but without good infrastructure such growth can be stifled.
Now, India has without doubt the expertise in manpower and a vision to build bigger ports, better airports and so forth, in other words, add to the infrastructure. At SMBC we bring on board financing and project execution capabilities. We are a leading player in the project finance sector, having been ranked third by Project Finance International in Asia for 2006 and awarded the Global Advisor of the Year in 2006. We believe that there is a synergy with our expertise and Indias growing infrastructure needs.
What is your view of the Japanese economy Do you see the new growth as a continuing phenomena
Yes. After a long time the Japanese economy is humming again. While we may not have the kind of growth that you have in India but I believe that for the enormous size of the Japanese economy the 2% growth is just as impressive. We believe that the growth will continue this year as well.`