BNP Paribas buys stake in Srei Infra, shares shoot up

In 2008, SREI demerged its infrastructure equipment financing business into a 50:50 Joint Venture Company, Srei Equipment Finance Limited (SEFL), with BNP Paribas Lease Group, a 100% subsidiary of the BNP Paribas Group.

Equipment finance company SEFL, which has 89 offices across India, has a total asset under management of Rs.18,747 crore for the quarter ended 30 September 2015. In lieu thereof, BPLG will sell its entire shareholding of 2.98 crore shares of SEFL representing 50% of the total paid-up equity capital to Srei in accordance with applicable laws.

SEFL is a non-banking finance company with joint venture between Srei Infrastructure Finance and BPLG, in which each of SREI and BPLG holds 50% of the total paid-up equity share capital on a fully-diluted basis.

BPLG will acquire 25.15 million or 5% equity shares of SREI Infrastructure (Q,N,C,F)* Finance for a consideration of 50% stake or 29.83 million equity shares of SREI Equipment Finance.

The deal, fructified just before the global meltdown, has now turned sour for BNP.

The transaction would enable Srei Infrastructure to consolidate 100% of the financial results of the infrastructure equipment business.

Srei Infrastructure Finance’s shareholders gave a thumbs up to the deal as the scrip rose over 13% to end the day at Rs 58.60 a piece on BSE. It will also pay the weighted average price of SREI shares in the two weeks preceding the closing date of the acquisition, if computed according to the Securities and Exchange Board of India (Issue of Captital and Disclosure Requirements) Regulations, 2009.

So, why is BNP exiting this business now? That is much less than what BNP had initially invested in Srei Equipment. “And with infra space showing signs of revival and with proceeds of our stake sale in Viom Networks (Rs 3,000 crore from American Tower Co) which will flow into the company, Srei would pursue new opportunities”, Hemant Kanoria, chairman and managing director, Srei Infra, said.