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Tuesday, December 27, 2011

SBI Capital looks to expanding mergers business

SBI Capital Markets Ltd, the investment banking subsidiary of State Bank of India, expects its mergers and acquisitions business to account for 30-40 per cent of its topline in the next three-to-four years. Close to 95 per cent of SBI Caps' total business comes from debt syndication at present.

The company – which sees a huge potential in mergers and acquisitions in areas like automobiles, pharmaceuticals, power and FMCG in countries like Australia, Indonesia and Mozambique – has created specific verticals and is in the process of training its manpower to leverage M&A opportunities in individual verticals, said Mr S Vishvanathan, managing director and chief executive officer, SBI Caps.

“There are lots of opportunities on the M&A front and we hope to increase our revenues from this sector. The segment is growing but it will take sometime. Our team is working on it. While our overall pie is also growing we want to increase our business from this segment,” Mr Vishvanathan told Business Line.

SBI Caps has been instrumental in various deals like the Rs 212-crore acquisitions of European company Danstoker and its German subsidiary by Pune-based Thermax Ltd and the Rs 1,300-crore acquisition of German multinational Dystarfor by Ahmedabad-based Kiri Dyes and Chemicals Ltd last year. The company is also believed to have helped Adani Group owned Mundra Port and Special Economic Zone to acquire Abbot Point Port in Australia in a $1.96-billion deal.

“Close to three-to-four deals are in the pipeline and might take shape soon. There are opportunities in coal and iron ore mine acquisitions,” Mr Vishvanathan said.

To facilitate M&A in individual sectors, SBI Caps has created 3-4 member teams in separate verticals like infrastructure in the areas of power, oil and gas and non-infrastructure sectors like auto, FMCG, hospitality, hotels.

The company will also leverage State Bank of India's banking relationship with Indian companies. “Being the largest loan syndicator in the world and having relation with almost every infrastructure provider in the country gives us an edge over others. We also have the benefit of SBI's relationship with large, mid and small corporates. Once SBI gets into anything then immediately the scale goes up because of our huge relationship and network, it is just that we are not adequately leveraging,” Mr Vishvanathan said.


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