On February 10, Kotak Mahindra Bank announced that it will buy out all current shareholders of Sonata Financing Private Limited, a non-banking finance firm, for an all-cash payment of roughly Rs 537 crore.
The private lender stated that it will purchase 2.6 crore fully paid up equity shares of Sonata with a face value of Rs 10 apiece.
According to Kotak Mahindra Bank, the acquisition is subject to regulatory and other clearances, including those from the 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.”
Kotak is not entering the microfinance market for the first time. Earlier in 2017, the bank paid Rs 139 crore in cash to purchase BSS Microfinance.
Sonata’s network of 502 branches across 10 states, according to Kotak Mahindra Bank, is complimentary to the 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.”
Meanwhile, Kotak Mahindra Bank’s stock closed 0.40 percent down on the BSE on Friday (February 10) at Rs 1,769.80 a share.
