SBI to Acquire 49% Stake in Tata Motors Finance
SBI plans to buy 49% stake in 
Tata Motors Finance Ltd- the vehicle financing company of Tata Motors. The Bank will use the funds to expand into loans for trucks and buses.
As reported by Mint, if the deal goes through, SBI will get access to Tata Motors' experience and network, while TMFL will gain access to capital...(Yeah right, the entire amount will be used by TM to repay its JLR debt). TMFL's CAR stood at 12.3% as on September 2009 (RBI Norms for NBFC CAR is 12%)
SBI's car loans business has grown as the auto loan disbursals rose 46.35% to Rs13,012 cr from the year earlier. The bank had signed a JV with General motors in December 2009 and with Toyota Kirloskar Motors last month.
The two sides have been discussing a stake divestment since Tata Motors raised Rs4,200 cr in May through an issue of NCDs backed by an SBI guarantee.
In September 2009, DealCurry had reported that Tata Motors was planning to sell around 10-15% stake in TMFL to Tata capital to raise Rs 200cr. This would have given TMFL a valuation between Rs1300-2000cr.
In the 9 months ended December, TMFL had a book size of Rs6,490 cr. It financed 102,245 passenger cars and trucks, 9.6% fewer than a year earlier, as disbursals fell 18% to Rs4,446 crore in the same period. A divestment will help the group consolidate the vehicle finance business, which currently involves three group firms—TMFL, Tata Capital Ltd and Tata Motors.
Tata Motors has a stand-alone debt of Rs19,532 cr. The JLR acquisition has proven to be a costly one for Tata Motors. In June 2008, Tata Motors had acquired Jaguar and Land Rover from Ford Motors for $2.3 bn. To finance this, Tata Motors raised a bridge loan of $ 3bn from a consortium of banks. Tata Motors planned to raise Rs. 7200 cr through 3 simultaneous but unlinked rights issues. However, the rights issue ran into problems as the share price of Tata Motors continued to slide down, after the issue opened.
Other options to obtain funds like divesting stake in the group companies, floating international equity related issues were also scrapped, due to adverse market conditions.
In December 2008, Tata Motors announced the issue of NCDs. Through all the fund raising efforts, the company was able to repay only $1bn by the end of 2008. Tata Motors was required to repay the entire amount of bridge loan by June 2009 which got rolled over.
In October, the company raised $375 mn through FCCBs to repay the balance of the bridge loan.
TMFL's competitor, Shriram Transport Finance Ltd had a loan book size of Rs 21,550cr for9 months ended December 2009. Last month, the NBFC had raised Rs 583cr through QIP by diluting 5.2% stake- valuing the company for around Rs. 11,211cr. Also, its CAR stood at 16.7% as on September 2009.
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KVEZAR VIEW
| Date | Transaction | Type | Buyer | Size ($mn) |
|---|---|---|---|---|
| 16/02/10 | Tata Motors Finance- SBI | M&A | State Bank of India | - |
| 16/09/09 | Tata Motorfinance - Tata Capital | M&A | Tata Capital Limited | - |
| Date | Type | Buyer | Target | Size ($mn) | State |
|---|---|---|---|---|---|
| 11/05/12 | M&A | Warburg Pincus International | Future Capital Holdings Limited (Co.) | - | Planned |
| 08/05/12 | M&A | HCL Group | DLF Pramerica Life Insurance Company Limited | - | Planned |
| 08/05/12 | M&A | AEGON | Aegon Religare Life Insurance Company Limited | - | Rumor |
| 02/05/12 | Private Equity | International Finance Corporation | MAS Financial Services Limited | 12.00 | Planned |
Company |
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| Name | Promoters | Office | Competitor | Website |
|---|---|---|---|---|
| State Bank of India | The President of India | Corporate Centre, Madam Cama Road |
Bank Of Baroda Punjab National Bank Union Bank Of India ICICI Bank Limited Axis Bank Limited HDFC Bank Limited IDBI Bank Limited Dhanlaxmi Bank Limited Indian Overseas Bank Kotak Mahindra Bank Limited Indian Bank City Union Bank Limited Yes Bank Limited |
www.statebankofindia.com |
| Tata Motors Limited | Tata Group | Bombay House, 24 Homi Mody Street,Mumbai-400001 |
Mahindra & Mahindra Limited Ashok Leyland Limited International Cars & Motors Limited Daimler India Commercial Vehicles Private Limited Mahindra Reva Electric Vehicles Private Limited (Formerly Known As REVA Electric Car Company Private Limited) Urastun Metal Industries Private Limited |
www.tatamotors.com |
| Tata Motorfinance Limited | Tata Motors Limited | C/O. Tata Motors Limited, 3rd Floor, Nanavati Mahalaya , 18, Homi Mody Street, Mumbai-400001 Maharashtra |
Sundaram Finance Limited Cholamandalam DBS Finance Limited L&T Finance Limited Shriram Transport Finance Company Limited |
www.tmf.co.in |
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