Indian private sector lender Kotak Mahindra Bank has signed a binding agreement to buy a 100% equity stake in Sonata Finance in a deal valued at INR5.37bn ($64.93m).
Sonata Finance is a non-banking finance company (NBFC), classified as an NBFC microfinance institution (MFI).
Go deeper with GlobalData
Subject to regulatory and other approvals, the deal will see Sonata Finance become a wholly-owned subsidiary of Kotak Mahindra Bank.
Explaining the rationale behind the deal, the lender said Sonata Finance will allow it to serve economically underprivileged households in a financially feasible way.
As of 31 December 2022, Sonata Finance had a customer base of 900,000, a branch network of 502 branches across ten Indian states and INR19.03bn ($230m) in assets under management.
The NBFC’s branch network is expected to complement the bank’s microfinance network, besides allowing the bank to scale operations in the rural & semi-urban markets.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataKotak Mahindra Bank commercial banking president Manish Kothari 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 & steadily grow our presence in the financial inclusion segment with an advances book in excess of INR53bn ($640.90m) serving ~1.3 million borrowers.
“There are significant potential synergies to be realized as a result of this acquisition and we look forward to continue serving the customers in a smooth and consistent manner and ensuring their needs are well-served going forward.”
In addition, the lender plans to use Sonata Finance’s network to offer the NBFC’s clientele a greater range of banking products to meet their changing needs.
Sonata Finance CEO and MD Anup Kumar Singh said: “Sonata was started with the objective of providing financing to underserved customer segment. I believe this mission is best served in a scalable and sustainable manner on a big bank’s platform. The transaction will bring immense benefits to Sonata’s customers, employees and other stakeholders.”
