SBI mulls raising stake in investment banking JV to 51% amid capital market boom
Mumbai: State Bank of India is considering a plan to take control of its investment banking joint venture (JV) with Investec India, according to two sources familiar with the matter. The move comes as India’s largest lender seeks to strengthen its deal-making and distribution capabilities amid a multi-year rally in the country’s capital markets.
The first person cited above said on condition of anonymity that SBI is considering increasing its stake from around 20% to 51% after the Reserve Bank of India (RBI) rejected its previous attempt to increase its stake to 40% a few years ago.
“The regulator generally wants bank stakes in other businesses to be 20% or less, which is 51%,” this person said. “This is to ensure that if the bank has a majority stake, it can exercise greater control and the entity can come under the consolidated supervision of the RBI.”
SBI’s 20% stake in Investec Capital Services (India) Pvt Ltd is held through its subsidiary SBI Capital Markets (SBI Caps) and dates back to 2020.
The remaining 80% shares belong to Investec India Holdco Ltd (IIHL). The holding company is a subsidiary of Investec Investments (UK) Ltd, which is a subsidiary of Investec Bank Plc.
Investec Capital Services (India) provides services in private credit, mergers and acquisitions, and equity and debt capital markets. It also has an institutional equities business and in its FY25 annual report stated that it was able to acquire new clients domestically and internationally, which helped grow the business.
“While SBI Caps has signed many deals, this partnership has helped distribute it and bring in more investors,” said the person cited above.
The second person previously mentioned said no proposal had been moved to the board. No formal application has been made to the JV and the RBI yet. Once the decision is made internally, SBI is expected to approach the regulator with a fresh proposal.
The first person added that SBI will not consider increasing the stake to 100% as the joint venture is performing well in the current structure and Investec’s presence helps. The idea now is to have more say, which under current regulations is only possible with a majority stake.
“The bank never wants to exit joint ventures unless the other party plans to do so,” the first person said.
Emails sent to SBI, SBI Caps and Investec Capital Services remained unanswered till the time the news was published.
Analysts are optimistic about Investec Capital Services’ business prospects. Analysts at Crisil Ratings on February 5 reaffirmed its rating on long-term bank credit line at AAA.
The rating also affects Investec India’s adequate rating, Crisil said. capitalization according to the current and planned scale of operations and the company’s experienced management team.
“SBICAPS also sees the joint venture as an important vehicle for the ECM (equity capital markets) segment and is involved both at the board level and in the day-to-day running of the ECM business. Both partners act in concert on strategic and key operational decisions,” Crisil said in a Feb. 5 report.
“In equity markets, the company has successfully closed and completed 19 ECM transactions in partnership with SBI Capital Markets Ltd. In corporate finance, the company continues to gain authority in the healthcare, consumer, technology and industrial sectors,” he said.
Investec Capital Services announced net profit ₹119 crore in FY25 ₹453 crore revenue. Company’s profit in the previous financial year ₹71 crore while revenues are ₹293 crore.
The company was listed as an associate company of SBI in its annual report. As on March 31, 2025, SBI had 27 subsidiaries, eight joint ventures and 18 subsidiaries.
There is a provision in the articles of association of Investec Capital Services for SBI Caps to increase its shares. According to articles, SBI Caps has the right to offer to buy more shares from Investec India HoldCo Ltd to increase its stake by 51% to 60%. This provision was specifically valid within one year after the end of the so-called lock-in period, which ended in January 2024. It could not immediately be determined whether this was still true.
As per the above-mentioned articles of association, “SBI Caps shall have the right to serve a notice on the company requesting the company to get the fair market value calculation done. After receiving the fair market value calculation, SBI Caps shall have the right to give a written notice to IIHC stating the number of equity shares proposed to be purchased and the fair market value by the Big Four Auditing Firms.”
It is stated that IIHC will be under the obligation to sell within 30 business days after the offer is made, and SBI Caps will be under the obligation to purchase the majority shares.
