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Rediff News  All News  » Business » DBS to pay Rs 228 cr for 37.5% in Chola Inv

DBS to pay Rs 228 cr for 37.5% in Chola Inv

June 17, 2005 09:54 IST

Singapore-based DBS Bank will invest Rs 228 crore to take 37.5 per cent in the Murugappa Group-controlled Cholamandalam Investment and Finance Company.

The deal will also see the Murugappa group lowering its stake from the current 55 per cent to 37.5 per cent.

"DBS Bank will pick up the 37.5 per cent stake in three stages -- by buying out the 15.15 per cent stake of Tube Investments (a Murugappa group company), by making a public offer for 20 per cent and in the final stage, Cholamandalam will offer a preferential allotment of 3 million shares to DBS," said M J Alagappan, chairman, Cholamandalam Investment and Finance Company. All purchases by the bank will be made at Rs 150 per share.

"We are particularly excited about the potential of the consumer finance business. Our experience in Thailand with Capital OK has reaffirmed our confidence to serve the mass retail market with quick and easy financing. The deal is very much in line with DBS' strategy of expanding the scale and scope of our operations across the region," added Rajan Raju, MD, head of South and South-East Asia, DBS Bank.

The main objective of the deal is to push business in the retail financial services, including consumer finance, asset management and securities in India.

DBS and Cholamandalam officials indicated that in retail finance, scale and size are essential which was one of the key reasons for the stake sale.

"The size and expertise of DBS can add significantly to Cholamandalam's existing strengths. Together we aim to achieve and sustain rapid growth in India's fast growing retail financial services markets," added Alagappan.

Cholamandalam Investment and Finance Company will eventually be called Cholamandalam DBS Finance Limited.
BS Corporate Bureau in Chennai