STRATEGIC tie-ups rarely add up to much unless both players are willing to put money where their mouth is. That’s why Standard Chartered is almost certainly going to become a cornerstone investor in AgBank when it launches its likely record-breaking IPO. This is about much more than shaking hands.
StanChart’s reasons are well-known. This year, Asian GDP excluding Japan is expected to grow by six per cent while the developed world limps out of recession; the engine-room of that growth will be China. A burgeoning middle class with growing demand for mortgages, loans and pensions is ripe for the picking and StanChart wants to be part of the action.
AgBank’s reason for letting a potential rival into the party is slightly more complex. There have always been nagging doubts over the quality of some of its assets.
It is also planning its IPO at a torrid time, and several forerunners have fallen by the wayside. With around half of the investment expected to come from overseas, it needs a reputable bank to add some credibility.
It couldn’t do much better for StanChart, whose brand has become a kitemark for banking since the crisis. There are still uncertainties over AgBank, but its British partner should soothe nerves.