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SoftBank to invest $440 mn in Indiabulls Housing-backed OakNorth Bank
Photo Credit: Reuters

Japanese internet conglomerate SoftBank Group Bank is investing $440 million in the UK-based OakNorth Bank, which counts Indiabulls Housing Finance Ltd as a shareholder.

SoftBank's investment of Rs 2,800 crore (£339 million) in OakNorth will increase the equity capital in the commercial bank to Rs 7,000 crore, Indiabulls Housing said in a stock-exchange filing on Friday. It didn't say if the deal involved selling part of its stake.

In a separate statement, OakNorth said it secured the investment from SoftBank Vision Fund and Clermont Group. It didn't give a breakup of the amount the two investors are putting in.

OakNorth also said that it will use the funds to start its lending operations in the US.

The statements come after the Financial Times reported on Thursday that SoftBank Vision Fund, the Japanese company's $93 billion private equity fund, was investing in OakNorth. The investment will value OakNorth around $2.8 billion, the Financial Times said.

Indiabulls Housing had invested Rs 650 crore in OakNorth for a 40% stake in late 2015. 

In October 2017, the Indian non-bank lender sold a 16% stake for $203 million (Rs 1,318 crore) to three investors, including Clermont, in a deal that valued the London-based bank at $1.27 billion.

Last year, Indiabulls Housing sold a part of its stake to Singapore sovereign wealth fund GIC for Rs 900 crore last year. 

The remaining value of Indiabulls Housing's stake in the British bank is Rs 3,000 crore, based on the price at which SoftBank is investing, the Indian lender said. 

OakNorth was founded by Indian-origin investor Rishi Khosla and Joel Perlman. The bank also counted Sushil Wadhwani, a former member of the Bank of England’s Monetary Policy Committee who runs his own asset management firm, as a shareholder.

It began operations in May 2015 as a digital-only lender with no physical branches. It offers short-term working capital loans and term loans to small and medium businesses, and savings products to retail customers.

While lending to SMEs in Britain is dominated by property-backed loans, OakNorth offers multiple-collateral loans. In effect, it is trying to solve the same problem that SMEs face in India. In India, non-banking finance companies, such as Indiabulls, try to bridge the gap left by commercial banks. Indiabulls Housing is looking at a similar play in the UK.

The current loan book of OakNorth is Rs 21,390 crore and the bank has no delinquencies as on date, Indiabulls said.

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