Sundaram Finance Ltd (SFL) has entered into an agreement to acquire the stakes of its partner BNP Paribas in Sundaram BNP Paribas Home Finance Limited (SBPHFL) and Sundaram BNP Paribas Fund Services Ltd (SBFS) for a consideration of over Rs 1,000 crore.
According to a company announcement, Sundaram Finance Limited (SFL) and BNP Paribas Personal Finance have reached an agreement whereby BNP Paribas Personal Finance has agreed to sell its entire 49.9 per cent equity stake in SBPHFL to SFL, subject to all regulatory approvals. SFL currently holds 50.1 per cent in the home finance company and the acquisition would increase its holding to 100 per cent, making the company a wholly owned subsidiary of SFL. The acquisition is expected to be worth Rs 999.67 crore for the 49.9 per cent equity stake of SBPHFL.
Similarly, SFL and BNP Paribas Securities Services (BNPSS) have reached an agreement under which the latter would sell its 49 per cent equity stake in SBFS to SFL, subject to all regulatory approvals. While SFL currently holds 51 per cent stake in the company, after the acquisition its shareholding in the entity would increase to 100 per cent, making it a wholly-owned subsidiary of SFL. The valuation of the shares to be acquired is around Rs 1.5 crore.
T T Srinivasaraghavan, managing director of SFL, said that Sundaram Finance and BNP Paribas Personal Finance had been working together over the past 15 years and BNP Paribas Personal Finance had added a lot of value to the technical aspects of the business.
"India is in an interesting phase in its economic journey. The financial services sector, specifically the housing finance sector, is poised for significant growth once the consolidation activity which is under way after the recent spate of volatility is completed. Given the strong synergy with the parent’s auto lending and related businesses, this will further strengthen our footprint in the retail financial services space," he said.
Sundaram BNP Paribas Home Finance Limited was incorporated on July 2, 1999, as a subsidiary of SFL to offer specialised housing finance services to the retail sector in India. SFL and BNP Paribas Personal Finance, a wholly-owned subsidiary of BNP Paribas France, entered into a joint venture agreement in 2007 under which BNP Paribas Personal Finance acquired 49.9 per cent equity stake in the company. With a focus on the south Indian market, the company in FY19, reported total income of Rs 1006.27 crore and a net profit of Rs 145.48 crore.
SBFS provides registrar and transfer agency services and other support services to mutual funds in India. Currently Sundaram Mutual Fund and BNP Paribas Mutual Fund are its major customers. In addition, it also provides back office support to over 25 private equity clients in India.