The domestic private equity (PE) market currently might have seen loss of momentum because of the economic slowdown, but the country?s largest commercial bank is planning big in this segment.
After setting up a PE fund in collaboration with Macquarie of Australia and IFC of Washington, aimed at investing in infrastructure, the bank is now planning to set up a general purpose fund jointly with sovereign entities in the West Asia.
SBI chairman OP Bhatt confirmed the development to FE and said the details of the plan to set up a new PE is being worked out. This, Bhatt said, would facilitate SBI?s expansion in the financial sector services in a big way.
?Our aim is to provide a complete range of financial products and services to our customers. We are in the process of entering those areas of financial services, where we do not have presence currently. We have entered into a joint venture agreement with Societe Generale group of France for custodial services business,?? he said.
The bank is at an advanced stage to set up a general insurance company and has signed a joint venture agreement with Insurance Australia Group (IAG) of Australia for General Insurance business.
However, Bhatt denied that the bank has any immediate plans to enter reinsurance business
?The bank is already into life insurance and is also entering into general insurance business through a joint venture route. We plan to aggressively concentrate on these two businesses, which itself have tremendous growth potential,?? he said.
On bank?s plan for overseas acquisition, he said that the valuations of overseas banks have crashed everywhere and many companies, including banks, appear to be targets for takeover.
But at the same time, if a valuation appears to be a bargain today, it sometimes becomes even cheaper tomorrow. It is always difficult to pick the bottom in a falling market. Asset quality remains an overriding concern. In such a situation, due diligence assumes paramount importance. ?At SBI, we are not averse to the idea of acquiring banks abroad, provided we see synergies in such acquisitions,?? he said.
SBI and Macquarie Group Limited (Macquarie) earlier announced the launch of the Macquarie-SBI Infrastructure Fund (MSIF), which will invest in infrastructure projects in the country.
International investors have committed $887 million to MSIF along with a direct investment commitment of $150 million by SBI, bringing total capital raised to $1.037 billion. SBI, Macquarie and IFC have committed $150 million each to bring a total of $450 million of sponsor commitments.
MSIF will continue to raise capital during 2009, and together with Indian domestic institutions, the total capital is anticipated to be between $2 billion and $3 billion