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DBS to sell stake in Cholamandalam DBS Finance

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Singapore-headquartered DBS Bank has reached an agreement with Murugappa Group for the latter to buy its 37.5 per cent stake in Cholamandalam DBS Finance, a pan-Indian financial services provider.

The purchase by Murugappa Group, DBS’ joint venture partner, was made at INR91 or SGD2.84 per share, representing a 1.2 per cent premium to the closing price of Cholamandalam DBS Finance shares traded on the Bombay Stock Exchange.

The transaction is expected to be completed on or before 12 April 2010 and is not expected to have any material impact on the financial performance of DBS.

DBS says the decision to sell the stake is in line with its recently announced strategy to grow in India by focusing on corporate clients as well as the high net worth and emerging affluent segments.

For the financial year ended 31 March 2009, DBS India recorded revenues of SGD192m and profit after tax of SGD81m. Over the same period, DBS India’s headcount has grown by over seven times to about 400.

DBS India has also expanded its branch network over the past two years. From two branches in 2005 – one each in Mumbai and Delhi –DBS now has ten branches across the country. Eight branches – in Bengaluru, Chennai, Kolkata, Moradabad, Nashik, Pune, Salem and Surat – opened in quick succession in 2008-09.

DBS India recently received regulatory approvals for two more branches in Kolhapur (Maharashtra) and Cuddalore (Tamil Nadu), which will be opened shortly.

Chief executive Piyush Gupta (pictured) says: “We are at the beginning of what has been heralded as Asia’s decade. With a growing network in India, as well as other major emerging markets in Asia, DBS is well-positioned to ride the region’s growth. DBS is the first and largest Singapore bank in India, and has enjoyed tremendous growth over the past five years. With the rising middle class and with growing intra-Asia trade flows, we are excited about the opportunities ahead.”

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