The UK’s Hinduja Group confirmed talks are on with two UAE banks to acquire a possible equity stake in one of them, part of a move to expand its already sizeable business operations in this country.
“We don’t do much of minority stakes — if the regulator allows it, we would like to pick up a significant portion,” said Gopichand Hinduja, Co-Chairman of the Group, which has interests spreading from financial services to automotive (the commercial vehicle maker Ashok Leyland), and more recently, in the digital technology realm as well.
“We had many options offered to us in the UAE financial services — we never know what will follow in your lap. You have to look for synergies, you have to do due diligence. The institutions we’re talking to are either not well managed or in need of fresh equity,” said Hinduja, who with his three brothers count themselves among the richest in the world, with a networth estimated at $17 billion (Dh62.44 billion) plus. He was here to helm a shareholders’ meet in Dubai late last week.
The name of the UAE banks involved in the talks were not revealed. Nor did Hinduja mention of a likely timeline to secure the deal.
Dubai will also host the Hindujas’ “family office”, which are essentially vehicles to manage investments of the super-rich. The Hindujas currently operates one out of Switzerland.
“What I can say is that the Hinduja family is committed to the UAE when it comes to investments,” Hinduja said. “Despite the uncertainties in world politics, the UAE is unique and it has the best relations with India. Our association with Dubai goes back to 1957.
“The world is going from globalisation is protectionism — we as a Group is sticking with globalisation. Globalisation is the only route that can keep society happy.
“Where global businesses find more comfort, they will go there. It’s not about avoiding taxes — we need to spend our time in creating business and not spend all time in reading forms about regulations. What’s the point of that?” (The Group owns a commercial vehicle assembling facility in Ras Al Khaimah, for its Ashok Leyland models.) The Group entity that is in talks to acquire a stake in a local bank is IndusInd International Holdings Ltd. (IIHL), which owns the IndusInd Bank in India. The latter, which came into being in 1994, has over 300 founding shareholders based in Dubai, including Ram Buxani of the Cosmos Group. Last year, IndusInd became the sixth Indian bank to have a market cap of Rs1 trillion (Dh62 billion; $17 billion).
“The fact is there is lots we can do with IIHL,” said Ashok Hinduja, who heads the India operations for the Group. “IIHL has a current valuation of $2.7 billion and by 2020 should go past $4 billion. We have not leveraged that enough.
“The Group wants to do more than just hold one bank (IndusInd Bank) in India. Within financial services, there are more opportunities to grow in India and elsewhere.”
A start to add to that portfolio has been made with the upcoming purchase of a bank in Mauritius. A non-binding bid has been made and a deal could be formalised shortly.
IIHL, meanwhile, is also gearing up for a listing on the Mauritius bourse in September next year. “The shareholders had invested at $1 face value — the net asset value now is at $90 plus,” said Gopichand. “By the time it goes for listing, it could be $120.
“At the shareholders meeting in Dubai, we could talk about all of our plans with the listing. It gives IIHL shareholders — and there are 600 odd overall — a chance to continue to share in the growth.”
As for IndusInd Bank itself, listed on Bombay Stock Exchange, a market capitalisation of $20 billion is on the near horizon. Its acquisition of Bharat Financial (in a Rs150 billion deal last year) has gone through the regulatory approvals. Another of the Group’s financial services entities in India, Hinduja Leyland Finance is also going in for a public float.
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“A Group like us which is over 100 years old always likes to be in a country where the rules are clear,” said Gopichand Hinduja. “We don’t know what’s going to happen in Britain with Brexit. How long can you keep on having this uncertainty.
“Now, there is so much uncertainty even in the reforms they are bringing. Even Switzerland has become worse.
“At the moment, the UAE and Singapore are the best in ease of doing business.”
Does it mean that the Group will consider having a structure where its corporate headquarters is not confined to one single jurisdiction? “We already have such a structure — we do not anchor ourselves to one such location,” said Hinduja. “The UAE represents a major portion, as does Singapore.”