Sundaram Finance to sell entire 49% stake in securities JV to BNP Paribas for $7M

Chennai-based Sundaram Finance Ltd (SFL) has received its board's approval to sell its entire 49 per cent stake in BNP Paribas Sundaram Global Securities Operations Pvt Ltd to partner BNP Paribas Securities Services for Rs 44.3 crore (6.9 million), according to a stock market disclosure.

Incorporated in 2008, Chennai-based BNP Paribas Sundaram Global Securities provides securities services and investment operations solutions to financial intermediaries, institutional investors in the Asia Pacific region.

BNP Paribas Sundaram Global Securities earned revenues of Rs 150.28 crore for the year ended March 31, 2015 against Rs 124.79 crore in the previous year. It reported a profit after tax of Rs 11.91 crore compared with Rs 9.78 crore in FY14.

This is one of a string of JVs run between Sundaram and BNP Paribas including a home finance venture and a fund accounting related services. In the past, the two also ran a mutual fund business but BNP had exited the JV five years ago.

This comes as back-to-back expansion initiatives in India for French financial services giant BNP Paribas. It has just sewn a deal to buy brokerage firm Sharekhan for around Rs 2,000 crore.

BNP Paribas has a presence in other businesses also through its joint ventures in life insurance with State Bank of India; in personal investment services with Geojit Financial Services and a BNP Paribas Leasing Solutions (Equipment Solutions) joint venture with SREI Infrastructure Finance. It now runs its own asset management company called BNP Paribas Mutual Fund.

For Sundaram Finance, this marks second such disengagement with a foreign partner. In February this year, the company got approval to buy 26 per cent stake in Royal Sundaram Alliance Insurance Company Ltd from JV partner RSA Group, UK, for Rs 450 crore ($70.4 million).

Last year in May, SFL offloaded its entire equity holding in Credit Information Bureau India Ltd (CIBIL) to the US-based TransUnion International Inc.

Sundaram Finance shares were trading at Rs 1,540 each, up 0.44 per cent on BSE in a weak Mumbai market on Tuesday at 3.06 PM.

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