Private lender Kotak Mahindra Bank on Friday announced that it has fully acquired microlender Sonata Finance for Rs 537 crore. The bank has entered into share purchase agreements with the current shareholders of Sonata, a Non-Banking Finance Company – Micro Finance Institution registered with the Reserve Bank of India.
With this transaction, Kotak Mahindra Bank will acquire 2,64,53,256 equity shares of Sonata, of face value Rs 10 each fully paid up, for a total consideration of approximately Rs 537 crore, constituting 100 per cent of the issued and paid-up capital of Sonata.
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The indicative time period for the completion of the acquisition is the first half of FY24.
The acquisition of Sonata will give Kotak Mahindra Bank access to 502 branches across 10 states and add 9 lakh women customers to its base. “Sonata provides a strong and vintage platform to enable the Bank to become a significant player in the financial inclusion segment, catering to the economically weaker and underserved households in a commercially viable manner,” the private lender said in a statement.
The acquisition is expected to be value accretive given the economies of scale and unlocking of efficiencies along with the bank’s own distribution footprint and technology. Kotak Mahindra Bank will also leverage Sonata’s distribution network and provide wider suite of banking products to Sonata’s customer base matching their emerging banking needs, it stated.
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This is the second such deal for the lender after acquiring BSS Microfinance in 2017. “The acquisition is for an aggregate all-cash consideration of approximately Rs 537 crore,” Kotak Mahindra Bank said, adding that Sonata will be a wholly-owned subsidiary of the bank once the transaction gets regulatory approvals.
Sonata was incorporated in April 1995 and had Rs 1,903 crore of Assets Under Management (AUM) as of December 31, 2022. It presents an opportunity before the bank to scale up its operations in the rural and semi-urban markets in the northern states of India, the statement said.
Kotak Mahindra Bank stock settled 0.06 per cent up at Rs 1,771.55 on the BSE on Friday.
