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Mumbai, Dec. 25: Japan’s Sumitomo Mitsui Trust Bank will initially pick up 2.77 per cent in Reliance Capital Ltd for Rs 371 crore ($58.4 million) through a preferential allotment.
The investment, which is subject to a lock-in period of one year, is being made at Rs 530 per share, representing a premium of over 11 per cent to the stock price of Reliance Capital on a relevant date, the financial services company said in a statement today.
Reliance did not mention the date for calculating the premium. Yesterday, it had informed the bourses of a minority stake sale to a foreign company, without giving any name.
Sumitomo’s relationship with the Anil D. Ambani group company will not be limited to the stake. Reliance Capital said it also planned to set up a bank with Sumitomo as a strategic partner.
Under the current regulations, aggregate foreign investment in a private bank from all sources is fixed at 74 per cent.
Reliance Capital said both the companies would collaborate to offer solutions to their clients, which includes M&A opportunities in India and Japan, and will assist each other in the distribution of their financial products.
Reliance Capital will support the clients of Sumitomo in their supply chain financing and advisory needs in India. Similarly, Sumitomo will support Reliance Group across its various listed group companies by providing a wide range of financial and other services in Japan and the Asia Pacific region.
Both the partners today entered into a comprehensive long-term strategic alliance, the second alliance of the Anil D. Ambani group company with a Japanese firm. Nippon Life recently hiked its stake in Reliance Capital Asset Management Company to 49 per cent from 26 per cent. It also has a 26 per cent stake in Reliance Life Insurance Company.
Sumitomo Mitsui Trust Group is the fourth-largest bank in Japan (in terms of market capitalisation and corporate loans) and Japan’s largest financial institution managing assets of $682 billion with assets under custody of $1.8 trillion in September.
