Steel Tycoon Mulls Foray Into Indian Non-Bank Finance Sector

JSW Group, the Indian conglomerate led by steel tycoon Sajjan Jindal, is exploring a foray into non-banking financial services after previously announcing plans to produce electric vehicles and enter regional aviation.

The Mumbai-based group — which runs the nation’s biggest steel producer and has interests in power, cement and ports — is on a diversification drive beyond manufacturing and is “examining and evaluating various opportunities” in the non-banking financial space, Chief Financial Officer Seshagiri Rao said in an interview. “We have a venture capital fund, so through that fund we get a lot of proposals.”

Jindal joins billionaire Ajay Piramal who has said he expects the non-banking financial services space to go through a “golden period” over the next few years as India’s economy expands at a brisk pace. At the same time, the nation’s banks are battling the world’s highest stressed assets ratio and have turned more cautious on lending.

“An NBFC is very lucrative if the company acquires or develops deep understanding of any economic segment,” said Ashvin Parekh, managing partner of Ashvin Parekh Advisory Services. “Groups such as Jindal have a presence in various markets and can acquire such knowledge,” he said, adding that their ancillaries, suppliers and dealers could perhaps be the initial market they target.

JSW plans to invest as much as 100 billion rupees ($1.6 billion) in the non-banking firm and is speaking to various partners for a potential joint venture, according to a person familiar with the developments, who asked not to be identified as the matter is confidential. Rao declined to comment on the investment and talks with potential partners.

JSW Group runs JSW Ventures, which is an early-stage technology-focused venture capital fund. The group said in January it plans to venture into electric cars by 2020 on expectations the government will promote such vehicles and has also applied under a subsidy program spearheaded by Prime Minister Narendra Modi to improve flight connectivity for small towns and villages.

India’s stressed assets — bad loans, restructured debt and advances to companies that can’t meet servicing requirements — have risen to about 17 percent of total loans, the highest level among major economies, data compiled by the government shows. Lawmakers recently approved a proposal giving the Reserve Bank of India more powers to resolve the nation’s stressed loans.

Source – Bloomberg

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