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Kotak Mahindra Bank to acquire Sonata Finance for Rs 537 crore

by Sumbul Farid
February 11, 2023
in Business, Tech
Reading Time: 2 mins read
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On February 10, Kotak Mahindra Bank said that it will take over 100 per cent of equity shares of Sonata Finance Private Limited, a non-banking finance company, from existing shareholders for an all-cash consideration of around Rs 537 crore.

The private lender said that it will take over 2.6 crore equity shares of Sonata, of face value Rs 10 each fully paid up. According to Kotak Mahindra Bank, the acquisition will be subject to regulatory and other approvals, including from Reserve Bank of India (RBI).

In a statement, the private lender said, “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.”

Furthermore, Kotak also mentioned 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 involving itself into the microfinance space. Previously in 2017, the bank had purchased BSS Microfinance in an all-cash deal for Rs 139 crore.

Moreover, Kotak Mahindra Bank also mentioned that Sonata’s network of 502 branches across 10 states is complementary to bank’s microfinance branch network.

Talking about 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.”

Kotak Securities official logo

Meanwhile, shares of Kotak Mahindra Bank on Friday (February 10) closed 0.40 percent lower at Rs 1,769.80 apiece on BSE.

Sonata, a two decade old registered Non Bank Finance Company-Microfinance (NBFC-MFI), had Rs 1,903 crore of Assets Under Management (AUM) as of December 31, 2022. The deal gives a strong stage to assist the bank in becoming a significant play in the financial inclusion space, tending to economically weaker and underserved households in a commercially viable manner.

According to a statement, the takeover, which is the second such deal for KMB after acquiring BSS Microfinance in 2017, will give the bank access to 502 branches across 10 states and add 9 lakh women customers to its base.

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On February 10, Kotak Mahindra Bank said that it will take over 100 per cent of equity shares of Sonata Finance Private Limited, a non-banking finance company, from existing shareholders for an all-cash consideration of around Rs 537 crore.

The private lender said that it will take over 2.6 crore equity shares of Sonata, of face value Rs 10 each fully paid up. According to Kotak Mahindra Bank, the acquisition will be subject to regulatory and other approvals, including from Reserve Bank of India (RBI).

In a statement, the private lender said, “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.”

Furthermore, Kotak also mentioned 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 involving itself into the microfinance space. Previously in 2017, the bank had purchased BSS Microfinance in an all-cash deal for Rs 139 crore.

Moreover, Kotak Mahindra Bank also mentioned that Sonata’s network of 502 branches across 10 states is complementary to bank’s microfinance branch network.

Talking about 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.”

Kotak Securities official logo

Meanwhile, shares of Kotak Mahindra Bank on Friday (February 10) closed 0.40 percent lower at Rs 1,769.80 apiece on BSE.

Sonata, a two decade old registered Non Bank Finance Company-Microfinance (NBFC-MFI), had Rs 1,903 crore of Assets Under Management (AUM) as of December 31, 2022. The deal gives a strong stage to assist the bank in becoming a significant play in the financial inclusion space, tending to economically weaker and underserved households in a commercially viable manner.

According to a statement, the takeover, which is the second such deal for KMB after acquiring BSS Microfinance in 2017, will give the bank access to 502 branches across 10 states and add 9 lakh women customers to its base.

Tags: Kotak Mahindrasonata finance
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