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Chennai May 9 Union de Credit pour le Batiment SA (UCB) will pay Rs 196.98 crore for a 49.90 per cent stake in Sundaram Home Finance Ltd, a subsidiary of Sundaram Finance Ltd.

UCB, a subsidiary of the Paris-headquartered international bank BNP Paribas SA, specialises in mortgage financing.

According to the information provided by Sundaram Finance to the stock exchange, UCB will buy the stake through an agreement with Sundaram Finance. Of the total purchase value, Rs 146.98 crore will go to Sundaram Finance and Rs 50 crore will be invested in Sundaram Home Finance.

Following statutory approvals, Sundaram Finance's holding in Sundaram Home Finance will be 50.10 per cent.

According to a press release, Sundaram Home Finance has a loan portfolio of Rs 1,250 crore and offers housing finance products focussing on retail customers.

Synergy

The release quoting Mr S. Viji, Chairman, Sundaram Finance, said the joint venture will combine the strength of the Sundaram Finance brand, the extensive distribution reach and retail credit management with the specialised housing finance skills of UCB and the global brand strength of BNP Paribas.

Mr Laurent Chouraki, CEO, UCB, said in the release that the mortgage market in India is driven by the housing needs. The partnership will contribute to the growth of domestic housing finance industry.

The joint venture with Sundaram Housing is its first outside Europe, according to Mr T.T. Srinivasa Raghavan, Managing Director, Sundaram Finance. UCB's speciality in mortgage finance and Sundaram Home's knowledge of the domestic market will help accelerate the growth of the business, he said.

It may be recalled Sundaram Home Finance became a subsidiary of Sundaram Finance when it bought out the 25 per cent stake that the multilateral lending agencies FMO Netherlands and IFC, Washington, held in Sundaram Home Finance Ltd for Rs 48.52 crore.

Also, BNP Paribas Asset Management and Sundaram Finance Ltd have formed a joint venture Sundaram BNP Paribas Asset Management Company Ltd. This company manages assets of about Rs 7,430 crore as on March 31, 2007. This followed BNP Paribas Asset Management buying a 49.9 per cent stake in Sundaram Asset Management company in 2005 for Rs 100.38 crore and a 49.9 per cent stake in another subsidiary, Sundaram Finance Trustee Company Ltd for Rs 3.46 lakh.

More Stories on : Housing Finance | Mergers & Acquisitions | Foreign Institutional Investors | Asset Management Companies

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