BNP to acquire 49.9% in Sundaram Home Finance

French banking group BNP Paribas SA today said it will acquire 49.9 per cent stake in Sundaram Home Finance (SHFL) for Rs 196.98 crore, a move which will give the foreign firm an increasing presence in the booming housing loans market of India.

Sundaram Finance and Union de Credit pour le. Batiment SA (UCB), a wholly owned subsidiary of BNP Paribas SA, today reached an agreement to this effect, which is subject to approval from the shareholders.

The French firm would pay around Rs 146.98 crore to SHFL, while Rs 50 crore would be invested directly in the company, resulting in a 49.90 per cent stake for UCB in the enhanced paid-up equity capital of SHFL, Sundaram Finance said in a communique to the Bombay Stock Exchange.

On completion of the transactions, Sundaram Finance would own the remaining 50.10 per cent of the enhanced paid-up equity capital.

Home loans rose around 30 per cent in the nine months ended December 31 and market analyst are targeting a growth of 25 per cent this fiscal.

BNP Paribas already owns 49.9 per cent stake in Sundaram Finance's asset management company.

The French banking major became the largest shareholder of south-based Geojit Financial Services in March as the latter issued 5.68 crore shares and 2.28 crore warrants to BNP Paribas.

BNP Paribas also has a stake in SBI Life, which is being jointly promoted by State Bank of India and Cardiff SA, the insurance arm of BNP Paribas.

Bloomberg adds: BNP Paribas SA, France's largest bank by market value, reported a 25 per cent increase in first-quarter profit on higher corporate and investment bank earnings and gains from asset sales. The shares rose to a record.

Net income climbed to ¤2.51 billion ($3.4 billion), or ¤2.73 a share, from ¤2.01 billion, or ¤2.38, a year earlier, Paris-based BNP said today. Profit beat the ¤2.06 billion median estimate of 13 analysts surveyed by Bloomberg News. Revenue rose 21 per cent to ¤8.21 billion.

"It's another good set of results,'' said Jerome Forneris, who helps manage $8.1 billion at Banque Martin Maurel in Marseilles and owns shares in BNP Paribas.

"Corporate and investment bank earnings are good and asset management also performed well in the quarter. Retail bank numbers are looking weaker but this is no surprise.''