Mumbai: State Bank of India has entered into a strategic partnership with MUFG Bank to collaborate on financing mergers and acquisitions, aviation and real estate projects to support Indian and global clients, the lenders said in a joint statement on Wednesday.
The agreement comes after the Reserve Bank of India issued the final guidelines for banks to finance mergers and acquisitions on 13 February, executing a significant regulatory shift that’s expected to boost deal funding by domestic lenders. Under the new rules, banks can fund up to 75% of a total value of a deal, but must ensure their total lending for such acquisitions does not exceed 20% of their core capital.
This deal is important as it deepens India-Japan financial ties and supports cross-border corporate activity. “By synergizing SBI’s unparalleled domestic reach as the national banking champion along with MUFG’s prominent international footprint, the partnership will serve as a vital bridge for investment flows and industrial collaboration between two of the largest global economies,” said Kishore Kumar Poludasu, deputy managing director at SBI.
Through their partnership, SBI and MUFG will explore opportunities in structuring and financing transactions in sectors such as M&A, aviation and real estate while also cooperating on M&A advisory, trade finance and retail banking solutions. The collaboration will also support Japanese companies expanding operations in India and Indian firms looking to grow in overseas markets, including Japan.
“Both banks will also help facilitate the introduction of Indian mid-corporates and micro, small and medium enterprises (MSMEs) to Japanese corporate clients, identifying financing opportunities that deepen transaction-level collaboration,” the statement read.
Synergy
The tie-up combines SBI’s large domestic banking network with MUFG’s global reach and expertise in cross-border financial structuring, allowing both institutions to facilitate capital flows between the two countries.
“We are witnessing strong momentum from Japanese companies expanding their presence in India, alongside increasing global ambition from Indian enterprises,” said Takuya Senoo, regional executive for India & Sri Lanka at MUFG.
Through the partnership with SBI, MUFG aims to provide integrated cross-border solutions that support both inbound investment into India and outbound expansion by Indian corporates, he added.
On 20 February, SBI chairman CS Setty had told reporters on the sidelines of an IBA event in Mumbai that SBI was in talks with Japanese lenders for a partnership in the acquisition finance business, and that SBI had the ability to disburse up to ₹94,000 crore to borrowers looking at acquisition financing, according to a report by Press Trust of India.
