Japanese Sumitomo buys Fullerton India for 19,000 crore

MUMBAI: Sumitomo Mitsui Financial Group, the world’s largest Japanese-based financial firm, acquires Fullerton India, the Indian non-bank financial arm of Singapore-based Fullerton Financial, for approximately $ 2.6 billion, or nearly 19,300 crore of rupees.
It is the largest Japanese takeover in the Indian financial services space. In addition, this is the first time that a Japanese company has embarked on general retail credit in India.

Initially, Sumitomo will buy 74.9% of Fullerton India and the balance 25.1% at a later date, according to a statement from the company being acquired. Although the two companies did not disclose the value of the deal, sources said Sumitomo would initially pay $ 2 billion for the nearly 75% stake in Fullerton’s Indian branch, with the balance after it would become a 100% subsidiary.
Japan is one of the main investors in India. According to government data on foreign direct investment (FDI) in the country, between 2000 and 2021, Japanese companies invested $ 35.4 billion, making it the fifth largest contributor of foreign funds for that period. More than 1,000 Japanese companies are currently operating in India, according to industry sources.
In the manufacturing space, Suzuki (in Maruti Suzuki), Toyota (in Toyota Kirloskar Motors), Honda and Sony are large Japanese conglomerates with a substantial presence in India. In addition, Bank of Tokyo Mitsubishi, Mizuho Corporate Bank and Sumitomo Mitsui Financial Group are active in the business banking industry in India.
In financial services, the global insurance company Nippon Life is one of the largest contributors to FDI.
Mitsui Sumitomo is a minority shareholder of Max Life Insurance. Veterans in the financial services space have said Sumitomo’s entry into the NBFC industry is a major milestone for a Japanese company. “There are thousands of NBFCs across the country. Some Japanese companies may be present through minority stakes, but Sumitomo’s entry through this deal (Fullerton) is the most important, ”said a financial services industry analyst.
Currently, Unlisted Fullerton India offers auto, personal and business loans, mortgage finance, property loans and securities. Through this takeover, the Japanese major intends to take advantage of “Fullerton India’s expertise at the service of mass consumers and MSME customers in India”. Citigroup, Cyril Amarchand Mangaldas and Allen & Overy were Fullerton Group’s financial and legal advisers in this transaction.