French banking and financial services giant BNP Paribas SA has agreed to acquire a 5 per cent stake in SREI Infrastructure Finance Ltd in lieu of its 50 per cent holding in their joint venture SREI Equipment Finance Ltd.
BNP Paribas Lease Group (BPLG), a unit of the French firm, will pick up the stake in the SREI Infrastructure out of the company's treasury stock, the Indian firm said in a stock exchange filing.
BPLG will acquire the stake from SREI Growth Trust, which owns 9.66 per cent of the total paid-up share capital of SREI Infrastructure, in lieu of its ownership in SREI Equipment.
Although the deal value wasn't disclosed, as per the latest market cap of SREI Infrastructure, its 5 per cent stake is worth Rs 147 crore ($22 million). The company's scrip shot up 13.35 per cent to close at Rs 58.6 a share in a flat Mumbai market on Tuesday.
The non-cash transaction will see SREI Equipment, which so far was being operated as a joint venture between non-banking finance company SREI Infrastructure and BNP, become a wholly owned unit of the Indian firm.
The deal will help BPLG to gain exposure to the larger infrastructure sector in the country. SREI Infrastructure will benefit by having BPLG as a shareholder and giving it full control of the equipment finance unit.
The transaction is expected to be completed by March 31, 2016, subject to regulatory approvals.
SREI Equipment offers loans to customers to buy mining and construction equipment as well as commercial equipment. It also provides asset-based financing for transportation and farm equipment, medical systems, information technology, and office equipment and renewable energy systems such as solar heaters.
The equipment financing company has a pan-India presence with offices in 89 locations. It has total assets under management of Rs 18,787 crore as od September 30, 2015.
SREI Infrastructure is an infrastructure finance institution. Its businesses include infrastructure project finance, advisory and development, infrastructure equipment finance, alternative investment funds, capital market and insurance broking.
Ambit Capital advised BNP Paribas on the transaction.
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