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Moumita Bakshi Chatterjee

New Delhi, Sept. 21 Leading financial services firm Bear Stearns Companies Inc’s subsidiary has evinced interest in acquiring 100 per cent stake in Ford Automotive Finance Company India.

The wholly owned subsidiary — Bear Strategic Investment Corp — proposes to buy out the company from Ford Credit International.

Ford Automotive Finance Company India (formerly known as Ford Credit Kotak Mahindra) was earlier granted foreign collaborator approval for providing financial services for sale and finance of Ford auto and Ford products.

The company was originally a joint venture between Ford Credit International which held 55 per cent of the equity while 45 per cent was collectively held by Kotak Mahindra Bank Ltd, Kotak Mahindra Investment Ltd and Mahindra and Mahindra.

In 2005, the Foreign Investment Promotion Board approved Ford Credit International’s acquisition of the entire equity share capital held by other three partners (45 per cent) on the condition that it would fulfil minimum capitalisation norms of $50 million required for 100 per cent FDI in NBFCs within 24 months. Of this $7.5 million was to be brought upfront.

Since the acquisition was completed in 2005, the company was required to capitalise Ford Automotive Finance Company India to the extent of $50 million before October 2007.

With Ford Credit International now deciding to exit the company — the purchase consideration for the acquisition is $22 million representing the capital of company — it has requested that Bear Stearns be viewed as the new entrant acquiring 100 per cent of equity of the NBFC with obligation to capitalise the company to the extent of $50 million by infusing additional capital of $28 million in the company within 24 months from the date of acquisition.

The proposal is currently with the FIPB, sources said.

More Stories on : Mergers & Acquisitions | Consumer Finance | Foreign Institutional Investors

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