Kotak Mahindra Bank on February 10 said that it will acquire 100 percent of equity shares of Sonata Finance Private Limited, a non-banking finance company, from existing shareholders for an all-cash consideration of approximately Rs 537 crore.
The private lender said that it will acquire 2.6 crore equity shares of Sonata, of face value Rs 10 each fully paid up.
The acquisition, Kotak Mahindra Bank stated, will be subject to regulatory and other approvals, including from Reserve Bank of India (RBI).
“The transaction provides the bank with the opportunity to scale up its operations in the rural and semi-urban markets in the northern states of India,” the private lender said in a statement.
Moreover, Kotak also stated that it will “leverage Sonata Finance’s network to provide a wider suite of banking products to SFPL’s customer base matching their emerging banking needs.”
This is not the first time that Kotak is foraying into the microfinance space. Earlier in 2017, the bank had acquired BSS Microfinance in an all-cash deal for Rs 139 crore.
Further, Kotak Mahindra Bank also stated that Sonata’s network of 502 branches across 10 states is complementary to bank’s microfinance branch network.
Commenting on the acquisition, Manish Kothari, President – Commercial Banking, Kotak Mahindra Bank said, “This acquisition is in sync with our broad vision and strategy. We had successfully acquired BSS Microfinance in 2017 and since then have been able to integrate and steadily grow our presence in the financial inclusion segment with an advances book in excess of Rs 5,300 crore serving ~1.3 million borrowers. There are significant potential synergies to be realized as a result of this acquisition.”
Additionally, Anup Kumar Singh, CEO and MD of SFPL said, “The transaction will bring immense benefits to Sonata’s customers, employees and other stakeholders. I am pleased that current customer households of Sonata will benefit from Kotak Bank’s full range of products, and best-in-class digital services.”