TAIB Bank has set up a joint-venture merchant bank in India with 10 Indian industrial and financial companies. The new bank is planned to support the Bahrain-based institution’s growing activities in the subcontinent, including identifying investment opportunities for a $50 million investment fund to be launched in March (MEED 10:2:95).
TAIB has a 51 per cent stake in the joint venture, to be called TAIB Capital Corporation, which will have capital of Rs 50 million ($1.4 million). The managing director of the new bank is TS Sarangapani, who has been involved with setting up the new institution.
The shareholders’ agreement was signed on 20 February by TAIB’s vice- president Iqbal Mamdani and the representatives from the Indian firms. The other shareholders are Essar Group, Kotak Mahindra Finance, Hindustan Alloy, Baroda Rayon Corporation, ITC, Usha Martin Group, Western Indian Industries, Murugappa Group and South Indian Bank.
Most of the companies are industrial conglomerates or financial institutions which have developed a corporate relationship with TAIB during the past three to four years. The companies were invited to participate after the Indian government restricted TAIB’s stake to 51 per cent.
The bank will be based in Bangalore, Karnataka state. However, the Indian firms are spread throughout the country, and will help build up business for TAIB Capital.
TAIB Capital will be involved in corporate financing and advisory services, helping to promote TAIB’s existing work between India and the Gulf. TAIB is already advising one of the shareholders, Western Indian Industries, on plans to build a waste lube oil refining plant in Bahrain.
‘We would now like to a be a catalyst in building new economic ties as the Indian economy continues to be liberalised,’ Mamdani said. ‘These economic ties will enhance the flow of funds from the Gulf to India and at the same time assist Indian companies to invest their funds in industrial projects in the Gulf and the rest of the Middle East.’
The merchant bank will also identify opportunities for TAIB Bank’s investment activities, including an India fund being set up.
The $50 million open-ended fund will be registered in Luxembourg. Marketing should begin at the end of March or beginning of April, and will last for about a month. Called the Everest Fund, it will target Gulf nationals and institutions, although non-resident Indians are also expected to support it.