Firming up its plans to set up a bank, Anil Ambani group firm Reliance Capital today roped in Japan’s Sumitomo Mitsui Trust Bank (SMTB) as a strategic partner to collaborate on various businesses, including in its proposed banking venture.
SMTB, Japan’s largest financial institution with assets under custody of USD 1.8 trillion, will take an initial stake of 2.77 per cent in Reliance Capital at an investment of Rs 371 crore as part of a “comprehensive long-term strategic alliance between the two companies.”
“Reliance Capital intends to establish a new bank in India, with support of Sumitomo Mitsui Trust Bank as strategic partner, as and when RBI’s policies permit formation of the same,” the two companies said in a joint statement.
SMTB and Reliance Capital, the financial services arm of diversified conglomerate Reliance Group, will also collaborate in providing solutions for their clients, including inter alia in the area of M&A opportunities in India and Japan, and will assist each other in distribution of their respective financial products through their networks.
Commenting on the deal, Reliance Group Chairman Anil Ambani said, “We believe Sumitomo Mitsui Trust will play an important role in the future of our company, through their all-round support and long standing experience, and will help accelerate our growth as we tap new opportunities and expand our existing businesses.”
This is the second major partnership that Reliance Capital has entered into with a Japanese financial sector giant after Nippon Life, to which it has sold stakes in its life insurance and mutual fund ventures.
The move also follows the new Indian government attaching significant importance to Japan for business relationships, especially after the recent visit of Prime Minister Narendra Modi to that country.
As part of the agreement, SMTB will be taking an initial 2.77 per cent strategic stake in Reliance Capital, amounting to Rs 371 crore through preferential allotment, with a lock-in period of one year.
The investment is being made at Rs 530 per share, representing a premium of over 11 per cent to the stock price of relevant date of Reliance Capital.
“We are very pleased to be strategic alliance partners with Reliance Capital, which is one of India’s leading financial institutions.
“We are particularly delighted to collaborate on a number of business initiatives that are proposed, and thereby contribute towards the development of the Indian financial industry through our collaboration with Reliance Capital, which we believe will be a very successful one,” SMTB President Hitoshi Tsunekage said.