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SBI Caps, the investment banking arm of State Bank of India, should gain more expertise to help domestic companies acquire natural resources which are key to our energy security, chairman Pratip Chaudhuri has said.
"There is a case to expand their (SBI Caps') expertise, particularly help the domestic companies look at resources. Domestic companies are looking for coal resources, gas reasources...They can be more active," Chaudhuri told PTI in an interaction here.
SBI Capital Markets is very active in the domestic debt market and has also acted as merchant banker for some equity issuances. It is also the sole member of M&A International from the country.
A slew of companies, both state-run as well as private ones, have been aggressively acquiring assets abroad given the lack of reserves in the country and in some cases like coal, due to the lack of requisite clearances to mine.
When asked why the 1986-incorporated SBI Caps has limited itself to being a loan syndicator primarily, Chaudhuri said, "in the debt market, they have a natural advantage. People think that if you give a mandate to SBI Caps, it is much easier to get the loan."
He, however, added that SBI Caps has participated in all the major equity issues last fiscal, including that of NTPC and Sail.
Chaudhuri, however, declined to comment when asked if the credibility of the company has been affected due to recent events, especially the inability to salvage the situation for banks in the Kingfisher Airlines account, saying he is only a non-executive chairman of SBI Caps and that it won't be proper for him to comment and as the non-executive chairman, his job is to have an overall picture of the business.
However, on the Kingfisher fiasco, he said that SBI Caps was asked to recommend CDR, but it is up to the individual bankers to implement its proposal.
It can be noted that banks had Rs 7,500 crore exposure to the grounded airline. The airline had undergone two CDRs both arranged by SBI Caps and now the banks are recovering their money by encashing the guarantees. But so far they could get only around Rs 900 crore.
Kingfisher has been in default of this loan since January 2012 and from last October, it has been grounded. The company posted a profit of Rs 296 crore in FY13, up by 17.93% from Rs 251 crore a year ago.
Among the other subsidiaries like general and life insurance ventures and credit cards, Chaudhuri said the bank was unlikely to spin off any of them into independent companies keeping the interests of the joint venture partners in mind.
On factoring business, Chaudhuri confirmed that it has indeed been put on the block but said there are some valuation issues which are proving to be a stumbling block.
SBI Caps has been given the mandate to find a buyer, Chaudhuri said, adding, "they are looking out, there are some valuation issues, I have not put a time-line, but we are winding down that business because today you can do factoring in the bank itself."
