SMFG completes the purchase of 74.9% stake in Fullerton India
The acquisition gives SMFG access to a pan-India footprint across 25 states, 600 towns and 58,000+ villages through 698 branches
New Delhi: Sumitomo Mitsui Financial Group, Inc. (“SMFG”) completed on 30 Nov 2021 the purchase of a 74.9% stake in Fullerton India Credit Company Limited (“Fullerton India”) from Fullerton Financial Holdings Pte. Ltd. (“FFH”). Post completion of the purchase, Fullerton India has become a consolidated subsidiary of SMFG. SMFG will eventually purchase 100% of Fullerton India over a period of time.
The transaction marks the largest M&A of a private company in Indian financial services in the last 2 years and the largest ever inbound control acquisition by a Japanese enterprise entering the Indian market. The acquisition gives SMFG access to a pan-India footprint across 25 states, 600 towns and 58,000+ villages through 698 branches. It reinforces SMFG’s push into Asian consumer and MSME lending, and reaffirms the strength of Fullerton India’s platform underpinned by best-in-class corporate governance, risk management, prudent liquidity management, agile technology, and advanced analytics.
As part of the transaction, Fullerton India’s Board will be reconstituted to comprise Mr. Nobuyuki Kawabata, Mr. Rajeev Veeravalli Kannan, Mr. Hong Ping Yeo, Mr. Anindo Mukherjee, Mr. Shantanu Mitra, Mr. Shirish Moreshwar Apte, Dr. Milan Robert Shuster and Ms. Sudha Pillai. Fullerton India’s management team will continue to operate under the leadership of Mr. Mitra, Managing Director and CEO of Fullerton India.
“We are delighted to welcome Fullerton India as a member of SMFG and our business partner in India. The foundation of a country’s development is not just the growth of its corporates but also that of its citizens – Fullerton India will play an important role to promote inclusive growth in line with our long-term strategy for India,” said Mr. Jun Ohta, President & Group CEO of SMFG. Mr. Ohta added, “We are excited to work with the Fullerton India management team led by Mr. Shantanu Mitra and are confident that we will be able to unlock the potential of the Fullerton India platform and drive significant value creation through synergies between SMFG and Fullerton India. SMFG is committed to supporting the growth plan of Fullerton India by leveraging our customer network and through funding support.”
“FFH is a leading Asian operator investor in financial services promoting financial inclusion for mass market consumers and MSMEs. We are delighted to partner with SMFG who is as committed to delivering differentiated financial products and services, empowering customers and creating broader stakeholder impact as we are,” said Mr. Hong Ping Yeo, CEO of FFH. “We believe that SMFG’s experience in building high quality franchises and digital platforms in emerging markets is valuable to the next leg of Fullerton India’s journey. At the same time, FFH will partner with SMFG as a significant minority shareholder and work with SMFG to ensure a smooth and successful transition,” Mr. Yeo added.
“With the rapid deployment of vaccines and steady decline in COVID infection rates, we are witnessing a strong revival of economic activity in India. There is a steady pick up in credit demand and healthy loan growth. In addition, portfolio quality is also demonstrating encouraging signs of improvement,” said Mr. Shantanu Mitra, Managing Director and CEO of Fullerton India. Mr. Mitra added, “With the support of two reputed multinational houses as shareholders, Fullerton India is well positioned to further strengthen the franchise and capitalize on the growth in the Indian market.”
Additional transaction details
Fullerton India Home Finance Co. Ltd (“FIHFC”, or “Grihashakti”), a housing finance company (“HFC”), continues to be a wholly-owned subsidiary of Fullerton India.
Citigroup, Cyril Amarchand Mangaldas, Allen & Overy were financial and legal advisors to FFH whereas J.P. Morgan, Anderson Mori & Tomotsune were financial and legal advisors to SMFG.
About SMFG
Sumitomo Mitsui Financial Group, Inc. (“SMFG”) is the holding company of one of the largest global banking and financial service groups, offering a diverse range of financial services, including commercial banking, leasing, securities and consumer finance with a heritage exceeding 400 years in Japan. SMFG is listed on the Tokyo and New York (via ADR) Stock Exchanges and has a market capitalization of approximately US$44.9 billion (as of 29 October2021). SMFG is one of global systemically important banks (G-SIBs) and has high credit ratings of A1 by Moody’s Investors Service, and A- by Standard & Poor’s.
About FFH
Fullerton Financial Holdings Pte. Ltd. (“FFH”) is an independently operated strategic and operating investor in financial and related services in emerging markets. It is a wholly-owned independent portfolio company of Singapore- headquartered investment company, Temasek. FFH creates shareholder value by being committed to building differentiated business models focused on the Mass Market and SME segments, and an enabler of digital innovation for its portfolio companies. As at end December 2020, FFH’s portfolio includes investments in 6 countries with total Group assets of SGD 6.9 billion.
About Fullerton India
Fullerton India Credit Company Ltd. (“Fullerton India”) is a leading diversified NBFC registered in India. Fullerton India started its India operations in 2007 and has established a pan India presence – across 600 towns and 58,000+ villages through 628 branches and 12,800+ employees offering lending products to underserved retail and small business borrowers and has served more than 8.3 million customers to date.
About FIHFC
Fullerton India Home Finance Company Ltd. (“FIHFC”) is a housing finance company registered in India and a wholly- owned subsidiary of Fullerton India. FIHFC offers loans to salaried and self-employed individuals and organisations. Launched in December 2015 and headquartered in Mumbai, FIHFC caters to the housing finance needs across India and operates in 70 locations with 700+ employees and has served more than 30,000 customers to date.
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