AIG Cap buys out leasing firm firm

AIG Capital India, a subsidiary of US-based AIG Capital Corporation, is acquiring a Chennai-based small non-banking finance company (NBFC) as part of its plans to foray into consumer lending in the second-fastest growing economy.

AIG Capital has agreed to buy a 75 per cent stake and management control in Vivek Hire Purchase & Leasing (VHPL), but did not disclose the price it would pay for it.

VHPL accepts public deposits and is in the business of financing buying of refrigerators, air conditioners, office equipment, portable generators and two-wheelers. VHPL has about Rs 100 crore of loan assets.

Sunil Mehta, country head and CEO AIG India, said, "Globally, in consumer finance we have five products- durable finance, auto loans, home loans, personal loans and credit cards. Our endeavour is to bring these five products to the Indian customers and are in the process of sequencing our products entry offering."

The transaction is expected to close in early 2007, as VHPL needs to seek the Reserve Bank of India's (RBI) approval being an NBFC which accepts deposits from the public.

VHPL is owned by the promoters of Vivek Ltd, a consumer durables retailer. Vivek Ltd will retain a 25 per cent stake in the NBFC. VHPL and Vivek also signed a retailer co-operation agreement for the mutual benefit of both companies.

"The idea behind acquiring VHPL is that they will provide the platform to launch our loans and durable finance offering as they already have customers in this area," he said.

"In terms of other new initiatives, we have the asset management company seeking SEBI approval and also planned entry into real estate development. We hope to get the regulatory approvals in the first quarter of 2007. For each business there is a regulatory process."