Financial Times

Mitsubishi UFJ plans link with ICICI of India

Sept 8, 2006

Mitsubishi UFJ Securities of Japan plans to found an investment banking joint venture with India's ICICI Bank, signalling a rising tide of cross-border deals between the two countries.

    The news came as two other top Japanese financial groups - Dai-ichi Mutual Life Insurance and Softbank Investments - unveiled steps to expand into the Indian market, amid growing confidence the country will become the next growth market after China.

    Under their memorandum of understanding, Mitsubishi UFJ Securities and ICICI said they would co-operate in areas such as mergers and acquisitions, corporate finance and asset management.

    Japanese financial groups are stepping up their overseas ambitions as their home market faces a declining population.

    The focus on India builds on a long-standing economic relationship. India has been the largest recipient of yen loans since 1994 and is a key recipient of Japanese portfolio and foreign direct investment.
 

    Mitsubishi UFJ Securities said India was a major opportunity because of strong economic growth that was comparable to China with its many blue-chip companies.
 

    It said it expected increasing cross-border M&A activity between India and Japan. It was also keen to build up its presence in the business of "public offerings without listings", in which investment banks are permitted to offer Japanese retail investors overseas stocks without those stocks being listed in Japan.
 

    In the other deals, Dai-ichi Mutual Life Insurance, one of Japan's leading life insurance companies, is negotiating with the state-run Bank of India to enter the Indian life insurance market.

    Softbank Investments yesterday said it would launch a $100m venture capital fund with SBI Capital Markets, the investment banking subsidiary of State Bank of India. The fund will be the first in India targeted at privately held companies.
 

    Softbank said investment opportunities in India ranged from biotech and pharma to business process outsourcing and software.

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