Kotak Mahindra Bank (KMB) has entered into binding share purchase agreement(s) to acquire 100 per cent of equity shares of Sonata Finance Pvt Ltd (SFPL), a Non-Banking Finance Company – Micro Finance Institution (NBFC-MFI), from existing shareholders for a cash consideration of about ₹537 crore.

The indicative time period for completion of the acquisition is H1 (April-September) FY24. With this acquisition, SFPL will be a wholly owned subsidiary of the Bank after receiving regulatory and other approvals, per a KMB statement.

The private sector bank last made an acquisition of a NBFC-MFI in 2017, when it acquired 99.49 per cent of equity shares of BSS Microfinance for an aggregate all-cash consideration of ₹139.2 crore.

“SFPL provides a strong platform to enable the Bank to become a significant player in the financial inclusion segment, catering to economically weaker and underserved households in a commercially viable manner,” the Bank said.

As of December-end 2022, SFPL had Assets Under Management (AUM) of about ₹1,903 crore, servicing a customer base of about 9 lakh through 502 branches across 10 States (primarily in Uttar Pradesh, Madhya Pradesh and Bihar) , which complements the Bank’s microfinance network, it added.

Manish Kothari, President – Commercial Banking, KMB, 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 ₹ 5,300 crores serving about 1.3 million borrowers. There are significant potential synergies to be realized as a result of this acquisition...”

Anup Kumar Singh, CEO and MD of SFPL, 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.”

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