SBI talks to SocGen on Mutual, Caps pie

The State Bank of India (SBI) is in talks with a host of entities, including French financial major Societe Generale (SocGen) for transfer of its stake in SBI Mutual Fund and SBI Capital Markets.

An SBI source close to the development said SocGen may be offered as much as 40 per cent stake in the investment banking arm.

Laura Schalk, head of communications, Asia Pacific, SocGen, told Business Standard, "We have no comments to make on the issue as of now." The SBI source said, "Talks, however, are at a preliminary stage and SocGen is at present looking into the pros and cons of acquiring a stake in the investment banking arm."

SBI is keen on offloading a portion of its stake in SBI Caps to a third party, and has already had a few rounds of discussions. Things have advanced beyond the preliminary stage now.

SocGen has a presence in India in treasury and trade finance. It had exited the mutual fund business some years ago. Sources also said that SBI was now considering transfer of a portion of its stake to a foreign partner in these two companies.

India's largest commercial bank has been trying to offload a portion of its stake in the mutual fund business for sometime now and had also entered into talks with BNP which failed.

Meanwhile, SBI MF is targeting to double its assets under management (AUM) to Rs 10,000 crore by 2005 against Rs 5,450 crore now.

The fund is contemplating several plans to reach the five-digit mark, which includes growing inorganically (by acquiring other funds), increasing its reach through parent SBI and its associates and through joint ventures with foreign players.

The company is also planning to launch its portfolio management service, a separate division under its mutual fund in the next couple of months which will focus on high-net worth individuals, retail investors and corporate with a minimum entry level in the range of Rs 5-10 lakh.

Seeking a suitor

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• SocGen may be offered as much as 40 per cent stake in SBI Caps.

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• The French bank has a presence in India in treasury and trade finance.

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• It had exited the mutual fund business some years ago.