Kotak Capital in tie-up with Sumitomo for M&A

Kotak Mahindra Capital, investment banking arm of Kotak Mahindra Bank, has entered into an exclusive strategic alliance with Sumitomo Mitsui Banking Corporation (SMBC) and SMBC Nikko Securities for cross-border merger and acquisition (M&A) advisory services between India and Japan.

SMBC acquired a 4.5 per cent stake in Kotak Mahindra Bank in 2010, through preferential allotment of shares worth Rs 1,366 crore. Kotak and SMBC had also entered an agreement for business cooperation across various businesses of mutual interest, subject to relevant regulations. Since then, both have collaborated in and are working on a number of areas such as trade, finance, treasury products, corporate customer referrals, asset management and alternate assets.

The cooperation has now been extended to investment banking to complete the bouquet of offerings for companies in India and Japan. Earlier, Kotak Mahindra Capital had an exclusive strategic cooperation agreement with GCA Savvian Corporation for M&A advisory between Indian and Japan. The firms have concluded their agreement.

With the new agreement, Kotak, SMBC and SMBC Nikko Securities aim to play an active role in the growing cross-border M&A activity between India and Japan by leveraging their combined advisory capability, knowledge of local markets and long-standing corporate relationships.

Sumitomo Mitsui Banking Corporation is the core financial institution of Sumitomo Mitsui Financial Group, the second largest financial services group in terms of market capitalisation in Japan. SMBC Nikko is one of the largest full-service securities and investment banking firms in that country. The two companies have a combined team of 500 investment banking professionals in Japan and have advised on 90 transactions with announced deal value of $23 billion in calendar 2012.

“Japan is a priority market for cross-border M&A with India, and the growing relationship and synergies between the two countries will only continue to get stronger. We are confident through this alliance we can offer the best opportunities, advice and solutions to our clients,” said T V Raghunath, managing director and CEO of Kotak Investment Banking.

In calendar 2012, Japan ranked among the top three acquiring nations into India, and three of the 10 largest M&A transactions involving India took place in the India-Japan corridor.

Other areas of SMBC’s cooperation with Kotak Mahindra Bank is in setting up an India-focused infrastructure fund in collaboration with Canada-based Brookfield Asset Management. Shanti Ekambaram, president (corporate and investment banking) at Kotak Mahindra Bank, said fund raising is going on for this.