Kotak Mahindra Bank to acquire Sonata Finance for Rs 537 crore

Private sector lender Kotak Mahindra Bank on Friday said it will acquire 100 per cent equity shares of Sonata Finance Pvt Ltd, a non-banking financial company-microfinance institution (NBFC-MFI), from its existing shareholders for Rs 537 crore.

The acquisition will be subject to regulatory approvals, including by the Reserve Bank of India (RBI).

Post-acquisition, Sonata Finance will be a wholly owned subsidiary of the bank. This acquisition will enable the bank to scale up its operations in the rural and semi-urban markets in the northern states of India

It will make the bank a significant player in financial inclusion, catering to economically weaker and underserved households in a commercially-viable manner. Further, it is expected to complement the banks’ microfinance network as it has over 500 branches and is servicing a customer base of 900,000.

The acquisition is expected to be value accretive from inception given the economies of scale and unlocking of efficiencies along with the bank’s own distribution footprint and technology, it said in a statement.

The bank will also leverage Sonata Finance’s network to provide a wider suite of banking products to customers. Sonata Finance has assets under management of Rs 1,903 crore.

“There are significant potential synergies to be realised as a result of this acquisition. We look forward to continuing serving customers in a smooth and consistent manner and ensuring their needs are well-served, going forward,” said Manish Kothari, president – commercial banking, Kotak Mahindra Bank. 

Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd