Thursday, April 29, 2010

Millennium India Acquisition Company Announces Joint Venture Between SMC Group and Sanlam Investments

Millennium India Acquisition Company, Inc. ("MIAC") (Nasdaq: SMCG) today announced that SMC Group has entered into joint venture agreements (JV) with Sanlam Investments, the investment arm of South African financial services firm, Sanlam Group. The agreement between the parties calls for setting up two new businesses in India -- a wealth management company and an asset management company. Both will be well placed to take advantage of the
immense growth opportunities in India.

Founded in 1918, Sanlam Group is the second largest listed financial services group in South Africa, with a market capitalization of $7.7 billion (December 2007), and with total assets under management and administration of $77.8 billion.

S.C. Aggarwal, Chairman and managing director, SMC said, "I am as elated as all my colleagues in SMC Group and Sanlam Group are about this landmark deal. SMC is currently the fourth largest IPO distributor in the retail category in India and we are also the fourth largest in terms of trading terminals. Our customer base exceeds 400,000 -- and this is growing
at 10,000 new accounts per month. Following this JV, the Indian financial services space will see the further rise and transformation of SMC from our position as one of the largest securities brokerage firms into a well diversified financial company, with enormous global reach and intellectual know-how in line with international best practices."

The deal was made possible through an equity acquisition into the SMC group of companies, including warrants, which will ultimately create a 5% equity stake for Sanlam Investments in SMC Group. The total financial investment by Sanlam Investments on this joint venture with SMC, as the warrants are exercised and the new businesses are capitalised, is expected
to be in the region of USD 47 million. (For convenience, the exchange rate used is $1 = Rs 45.79, as of September 16 2008). Initially, Sanlam will invest Rs 103 crore (approximately $22.5 million), with the option to increase its investment to a total of Rs 215 crore (approximately $47
million), at an enterprise valuation for SMC Group of Rs 3,100 crore (approximately $677 million).

Johan van der Merwe, CEO of Sanlam Investments says, "This is the first step in our India investment strategy and a springboard for further expansion into the continent. For us it is a bold step into one of the biggest markets in the world and a transaction that is in line with our
international expansion strategy of furthering our business scope into promising markets outside of South Africa. SMC is a young and vibrant business with a large client base catering to all classes of investors. Although SMC is well known for its extensive pan-India experience, its personal touch and easy accessibility to investors across the country impressed us."

Van der Merwe adds, "Our projections show that if we capture only between 2 and 5 percent of the expected $1 trillion market by 2015, our business in India could contribute a significant portion to group profits."

Mahesh C. Gupta, Vice Chairman and managing director, SMC said, "Consistent with our strategy, this partnership enables us to focus on our client and distribution strengths and we will be able to leverage off Sanlam's recognised strengths in asset management product knowledge, global reach and governance processes. This is an excellent opportunity to establish a leading presence in India -- a strategic priority for us -- and to accelerate our growth. In addition, the JV will allow us to expand our product range with new high-quality investment products and provide a framework in which we can develop a true asset management culture for our
investment activities."

SMC and Sanlam have applied for regulatory approvals needed for the twin businesses, after which the transaction would be completed, and the companies would launch their products.

F. Jacob Cherian, Chairman and CEO of MIAC said, "Wealth management is an exciting new market opportunity in India. Boston Consulting Group research projects managed assets in India to grow from $170 billion to over $1 trillion by 2015. We firmly believe that the individually strong brands of SMC and Sanlam, coupled with the experienced teams, will set new standards in the financial services space in India and contribute enormously to the success of this new venture in tapping this opportunity."

Suhel Kanuga, President and CFO of MIAC said, "This transaction ratifies our belief in the core strength of the SMC Group franchise, its experienced leadership team, and the large growth potential in India. Despite the global turmoil in the financial markets, the Indian economy which is largely driven by domestic consumption, continues to grow at impressive levels. In fact, the Business Standard in India reported on September 1 this year, that 15 of the top 20 pension funds in the world have registered in India over the last 7 or 8 months alone, indicating that
India remains an attractive investment destination."

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