| State Bank of India (SBI), the country’s largest bank, has bought a 91 per cent stake in Global Trade Finance (GTF), a factoring company, for Rs 525 crore. |
| SBI acquired the stake from three of the four promoter shareholders of GTF at a price of Rs 75 per share, according to banking sources. |
| The three promoters who sold their stakes are: Export-Import Bank of India (40 per cent), International Finance Corporation (12.5 per cent), and FIM Bank Malta (38.5 per cent). The fourth promoter, Bank of Maharashtra, has decided to continue holding its 9 per cent stake in GTF. GTF is classified as a systemically important non-banking financial corporation (NBFC). |
| Interestingly, SBI already has a presence in factoring business through its subsidiary, SBI Factors, in which SBI has 54 per cent stake. SBI Factors has an asset base of Rs 1,220 crore as on March 31, 2007. |
| According to sources, SBI had already informed the Reserve Bank of India about its intention of buying the GTF stake. Industry sources say that SBI will not face any regulatory hurdles from RBI for approval since now it will own stakes in two factoring companies. |
| Investors who had put expressions of interests (EoIs) for buying stakes in GTF were JP Morgan Financial, GE Financial, Warbug Pincus, Actis (a pPrivate equity fund), Standard Chartered Bank, State Bank of India and Coface. |
| According to sources, IFC had made it clear when it had entered the joint venture with other shareholders that after five years of operation it will exit from the company through an IPO or through a sale to a strategic investor. This is the strategy adopted by IFC in other countries and the money is reinvested in the same country in another business. |
| EXIM Bank also felt that it has played the developmental role in GTF, besides the bank faces difficulty in providing capital as it needs the board and government approval. It wants to unlock its value in GTF. |
| GTF had reported a net profit of Rs 28.87 crore for FY07, a rise of 171 per cent compared to last year. Officials in Exim Bank were unavailable for comment while officials of GTF, IFC and FIM Bank Malta refused to comment. |
Source: Business Standard