FIMBank buys 38.5 per cent stake in GTF

Mumbai: First International Merchant Bank plc (FIMBank) has successfully completed the acquisition of a 38.5 per cent shareholding in Global Trade Finance Private Limited (GTF) the only provider of international and domestic factoring, and forfaiting services and receivable financing under one roof in India.

The board of directors of FIMBank had announced the terms of the acquisition for a cash consideration of US$4.57 million, on 26 March, 2004. The acquisition was executed by purchasing 12.5 per cent of the shareholding held by IFC and 26 per cent from WestLB AG, Germany.

The resultant new shareholding structure is as follows:
1. 40 per cent: Export-Import Bank of India (EXIMBank)
2. 38.5 per cent: FIMBank;
3. 12.5 per cent: International Finance Corporation (IFC)
4. 9 per cent: Bank of Maharashtra

As part of the acquisition, FIMBank has also entered into a put option agreement with GTF, EXIM and IFC, according to which IFC has the right to sell its entire stake in GTF to EXIMBank or FIMBank, at the exercise price; 1.85 times the book value per share of the company worked out on the pro rata amount of the shareholder equity. The exercise has to be completed by 30 September 2010.

GTF (capital base Rs45 crore) has acquired international leadership international factoring in less than three years. Headquartered in Mumbai, GTF currently has three offices in New Delhi, Bangalore and Chennai.

In an increasingly competitive international market with aggressive competition from China and other Asian nations, 'Letters of Credit' are rapidly being replaced by 'open accounts (OA)' and 'extended credit' to drive export growth. This, increases the risk for exporters and creates the need for financial products providing flexible financing that is not driven solely by assets offered as security; covers credit risk; and recovers receivables, when due — all areas operations.