BNP Paribas acquires 5% in Srei Infra

The group exits Srei's equipment finance arm

BNP Paribas Lease Group, a 100 per cent subsidiary of BNP Paribas Group, has decided to sell its entire 50 per cent stake in Srei Equipment Finance Limited (SEFL) to Srei Infrastructure Finance. In exchange, it has acquired five per cent in Srei Infrastructure Finance, which will now be the parent company of SEFL.

The deal will enable BNP Paribas to play a larger role in the infrastructure finance business, said Hemant Kanoria, chairman and managing director, Srei Infrastructure Finance in Kolkata on Tuesday. The Kanorias, who lead the Srei Group, had been restructuring their investment portfolio for quite some time.

Recently, Srei Infrastructure Finance sold its stake in Viom Networks to American Tower Corporation for Rs 2,952 crore. Srei Infrastructure has investments across the infrastructure sector, like roads to power projects. The total consolidated asset under management of Srei Infrastructure stood at Rs 36,236 crore as on September 30.

In 2008, Kolkata-based Srei Infrastructure had demerged its equipment finance business into a 50:50 joint venture company with BNP Paribas Lease Group. SEFL had an asset under management of Rs 19,362 crore as on September 30.

According to the terms of the deal, BNP Paribas will acquire five per cent stake from the Srei Growth Trust, an independent trust whose 100 per cent beneficiary is Srei. The trust owns about nine per cent stake in Srei Infrastructure. The realisation from the deal will be used to buy BNP Paribas's stake in SEFL.

BNP Paribas will buy five per cent in Srei Infrastructure on the basis of a price higher of weighted average price of equity shares of Srei during the 26 week preceding the closing date of acquisition or weighted average price of Srei shares during the two weeks preceding the closing date of the acquisition.

Notably, BNP Praibas Lease would acquire 25.15 million shares of Srei (representing five per cent of the total paid-up equity share capital), and in lieu, will transfer its entire shareholding of close to 29.83 million equity shares in SEFL, representing 50 per cent of its total paid-up equity share capital, to Srei.

According to rough estimates, taking the average price of each of Srei's equity shares at Rs 55, about five per cent stake in Srei Infrastructure would be close to Rs 135 crore. Ambit Capital was the financial advisor to BNP Paribas for the deal.

SREI'S JOURNEY SO FAR

• 1989: Srei Infra started operations
   
• 1992: Goes for IPO
   
• 1997: IFC (member of World Bank group), FMO (The Dutch development bank) and DEG (wholly-owned subsidiary of Germany-based KfW Group) invested as strategic equity partners
   
• 2002: Promoted India's first equipment bank - Quippo
   
• 2008: Forms 50:50 JV called SEFl with BNP Paribas Leasing Solutions
   
• 2009: Pact with Tata Group for telecom infra business under Viom
   
• 2010: Integration of Srei, Quippo to create a fully integrated infra institution
   
• 2011: Accorded 'infra finance' & 'public finance' company status
   
• 2015: BNP Paribas Lease Group sells entire 50% in SEFL to Srei Infra; buys 5% in Srei Infra, which becomes the parent company of SEFL