Reliance Capital picks Japan's Sumitomo Mitsui Trust Bank as partner

Anil Ambani Group company Reliance Capital on Thursday roped in Japan's Sumitomo Mitsui Trust Bank (SMTB) as a strategic partner to collaborate in various businesses, including its proposed banking venture.

SMTB, Japan's largest financial institution with assets under custody of $1.8 trillion, will take an initial stake of 2.77 per cent in Reliance Capital with an investment of Rs 371 crore as part of a comprehensive long-term strategic alliance between the two companies.

The investment is being made at Rs 530 per share, representing a premium of over 11 per cent to the stock price of relevant date of Reliance Capital.

Reliance Capital intends to establish a new bank in India, with support of Sumitomo Mitsui Trust Bank as a strategic partner, as and when RBI's policies permit formation of the same, the two companies said in a joint statement.

SMTB and Reliance Capital, the financial services arm of diversified conglomerate Reliance Group, will also collaborate in providing solutions for their clients, including inter alia in the area of M&A opportunities in India and Japan, and will assist each other in distribution of their respective financial products through their networks.

Commenting on the deal, Reliance Group chairman Anil Ambani said, "We believe Sumitomo Mitsui Trust will play an important role in the future of our company through their all-round support and long standing experience and will help accelerate our growth as we tap new opportunities and expand our existing businesses."

This is the second major partnership that Reliance Capital has entered into with a Japanese financial sector giant after Nippon Life, to which it has sold stakes in its life insurance and mutual fund ventures.

The move comes in the wake of the new government stepping up efforts to promote business ties with Japan highlighted by Prime Minister Narendra Modi visiting the country recently.

"We are very pleased to be strategic alliance partners with Reliance Capital, which is one of India's leading financial institutions. We are particularly delighted to collaborate on a number of business initiatives that are proposed, and thereby contribute towards the development of the Indian financial industry through our collaboration with Reliance Capital, which we believe will be a very successful one," SMTB president Hitoshi Tsunekage said.

Reliance Capital said it will also support clients of Sumitomo Mitsui Trust Bank in their supply chain financing and advisory needs in India.

Similarly, SMTB will support the Reliance Group across its various listed group companies by providing a wide range of financial and other services in Japan and Asia Pacific region.

Apart from financial services, the Reliance Group is present across a number of consumer-facing businesses such as telecom, energy, power, infrastructure and media and entertainment.