Fullerton Financial will be acquired by Sumitomo Mitsui Financial
Sumitomo Mitsui Financial Group Inc. (SMFG) of Japan has agreed to purchase a 74.9 per cent stake in Fullerton India Credit Company Ltd (FICC), adding to an increasing number of non-bank lending arrangements. Sumitomo will purchase the stake from Fullerton Financial Holdings Pte Ltd, which is owned by Singapore’s Temasek.
The deal, which is still pending regulatory approval, will see a Japanese bank enter the Indian market for retail and business loans to small and mid-sized businesses. According to a joint announcement from Sumitomo and Fullerton Financial, the objective is for Sumitomo to eventually buy 100% of Fullerton India. Both companies did not provide a timeline for Sumitomo’s acquisition of the new assets.
Both companies also refused to reveal the transaction’s financial specifics. However, a source familiar with the transaction estimated it to be worth $2 billion, making it one of the largest in India’s non-bank lending industry. “India has significant development potential and is one of our key areas, and we want to expand our presence there. We believe that the FICC platform’s inherent qualities of multi-product focus, pan-India distribution, and competent management would enable us to establish a comprehensive financial service offering in India,” said Jun Ohta, group chief executive and president of SMFG.
“SMFG is one of Japan’s leading financial services conglomerates, providing a wide range of services. We plan to use our knowledge of the Japanese market, as well as the capabilities of our franchisees, to expand into major emerging Asian markets,” Ohta added.
Fullerton India, a diverse non-banking financial firm, started operations in 2007 and now has 629 branches in 600 cities and over 58,000 villages. It employs over 13,000 people who provide loans to 2.3 million retail and small business consumers.
Mortgage loans to retail consumers and small and medium businesses, commercial vehicle loans, and secured rural loans such as two-wheeler loans and mortgage loans make up the company’s secured lending portfolio. Personal loans to salaried and self-employed individuals, as well as group and individual loans in rural regions, make up the unsecured portfolio.