Mumbai: Sumitomo Mitsui Financial Group, a global financial department headquartered in Japan, is buying Fullerton India, Indian non-banking financial arms from Fullerton Financial based in Singapore, with around $ 2.6 billion, or almost Rs 19,300 Crore.
This is the largest Japanese purchase in the Indian financial service room.
In addition, this is the first time a Japanese company enters general retail loans in India.
Initially, Sumitomo would buy 74.9% at Fullerton India and 25.1% balance later on, the release from the company obtained said.
Although both companies did not disclose the value of the agreement, the source said Sumitomo would pay $ 2 billion at first for almost 75% of the shares in India Fullerton’s arm, and the balance after becoming a fully owned subsidiary.
Japan is one of the top investors in India.
According to government data on foreign direct investment (FDIS) to the country, between 2000 and 2021, Japanese companies have invested $ 35.4 billion, making it contributors to the fifth largest fund from abroad for this period.
More than 1,000 Japanese companies currently operate in India, Industrial Source said.
In the manufacturing room, Suzuki (in Maruti Suzuki), Toyota (at Toyota Kirloskar Motors), Honda and Sony is a large Japanese conglomerate that has a substantial presence in India.
Also, Bank of Tokyo Mitsubishi, Mizuho Corporate Bank and Sumitomo Mitsui Financial Group have a presence in the Indian corporate banking room.
In the financial service room, Global Insurance Nippon Life is one of the biggest FDI contributors.
Mitsui Sumitomo is a minority shareholder at Max Life Insurance.
Veterans in the financial service room said the entry of Sumitomo to the NBFC sector was the main step for Japanese companies.
“There are thousands of NBFCs in this country.
Some Japanese companies may have some presence through minority bets, but the Sumitomo entry through this agreement (Fullerton) is the largest,” said a financial sector analyst.
At present, Fullerton India is not registered offering automatic, personal and business loans, mortgage finance, loans to property and securities.
Through this purchase, a large Japanese intends to take advantage of “Fullerton India’s expertise in serving mass market consumers and MSME customers in India”.
Citigroup, Cyril Amarchand Mangaldas, and Allen & Overy are financial and legal advisors for Fullerton Group in this agreement.