Dubai-based Samena Capital will purchase an up-to-40 per cent equity stake in Kleinwort Benson's UK-based private bank unit, the private equity firm said on Tuesday, as it aims to augment its product offering to include merchant banking.

The transaction involving Kleinwort Benson Bank (KBB), which offers private banking and corporate advisory services, will be completed by the third quarter of this year, a statement from Samena said. It did not disclose the deal value.

Samena is initially taking a 31.2 per cent stake in KBB, which is expected to rise to 39.98 per cent once various options are exercised over the next three years, Shirish Saraf, vice chairman of Samena Capital, told Reuters in an interview.

"This gives us an ability to create for Samena a third pillar to our activities, with our merchant banking and corporate finance ambitions going through the KBB name," Saraf said, noting the firm already offered private equity and credit products.

Samena is buying the stake from BHF Kleinwort Benson Group , the parent firm of KBB and one of Europe's oldest merchant banks.

After the deal completion, Samena intends to set up new global merchant banking operations in Dubai under the KBB brand, which will be a wholly-owned subsidiary of KBB.

The business will start up once regulatory approval from the regulator of the Dubai's financial free zone has been received - expected in the next three to six months - and will employ seven to 10 people initially, Saraf said.

"We are in the bank and the bank gets an advisory capability out of here, to further increase their presence in emerging markets," he added.

Samena Capital, focused on the subcontinent, Asia, the Middle East and North Africa, has a portfolio of $750 million. The purchase is being made with its own cash at the group level, as opposed to through one of its funds.

Samena's assets include stakes in India's Mahindra Two Wheelers and UAE's RAK Ceramics.-Reuters