India-based private sector lender Kotak Mahindra Bank founder and CEO Uday Kotak is looking to buy Hinduja Group’s IndusInd Bank.
A successful takeover is expected to create eighth-largest bank in the country in terms of assets.
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The bank is exploring an all-stock acquisition of its smaller rival.
Uday Kotak and the UK-based Hinduja family were into preliminary discussions over the proposal, in which IndusInd Bank founders can retain a stake post-acquisition.
Following an internal dispute over $11.2bn fortune, the Hinduja family began discussions over selling control of IndusInd Bank.
In June this year, the Reserve Bank of India (RBI), the country’s central bank, also pushed back on the Hinduja family’s plan to raise stake in IndusInd.
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By GlobalDataThe latest deal, if succeeds, is expected to boost Kotak Bank’s assets by nearly 83%.
It will also help improve the market value of IndusInd Bank, which dropped by 60% this year to $6bn due to poor asset quality and erosion in low-cost deposits.
However, the talks are at an early stage and the deal may even fall apart.
In an email, an external spokesman for IndusInd bank said that it “completely denies the said rumour and considers it malicious, untrue and baseless” adding that the founders “reiterate their full support to IndusInd Bank, now and always.”
In 2014, Kotak Bank acquired the local unit of ING Groep NV for INR150bn ($2bn), which is said to be the biggest takeover in India.
The bank has a market cap of INR2.7trn. It is the country’s third-largest bank by value.
