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Journalism of Courage
In the first-ever exercise of an Indian public sector bank acquiring an overseas bank, State Bank of India (SBI) has acquired 51 per cent stake in the Mauritius-based Indian Ocean International Bank (IOIB). IOIB is a retail bank based at Port Louis, which has a 7 per cent market share in Mauritius.
The move comes as part of SBI’s plan to expand overseas.
The deal is believed to be in the range of $12-15 million. SBI already has offshore banking operations in Mauritius.
“Yes, we have acquired a majority stake in the Mauritius bank. We have done some payments and the rest of the details will be known by tomorrow,” confirmed a top official of the bank.
The bank is now gearing up to acquire a second bank shortly either in Asia or Africa, the official said.
SBI has finalised an agreement with IOIB’s principal shareholder to enable it to gain management control, it informed the Bombay Stock Exchange.
SBI Deputy Managing Director (International Operations) D.D Sumitra is already in Mauritius to finalise the deal, sources said.
The retail banking outfit, listed with the Mauritius Stock Exchange, was founded in 1978 and has about 150 employees on its rolls.
According to data filed with the Mauritius Stock Exchange, IOIB had paid a dividend of Re (Mauritian) 1 for the fiscal ending June 2004.
SBI had earlier crystallised a two-phase overseas acquisition plan, which entails an investment of around $115 million. The bank had recently concluded a borrowing programme of $500 million, which is still parked outside India. SBI may be using these funds for the acquisition.
The bank will now go for a bigger takeover, which may cost over $100 million. SBI, which ranks 25th among Asian banks in size, is busy working out plans to turn into a powerful banking multinational, doubling its current international operations in the next three to four years. Currently, the size of its international operations across continents is $9 billion.
“We are targeting to generate 15 to 20 per cent of the bank’s profit from international operations,” said the bank official.
