Kotak Mahindra Bank Ltd, backed by billionaire Uday Kotak, is considering selling a minority stake in its general insurance unit, according to a Bloomberg report. The lender is working with Morgan Stanley on the potential sale of a stake in Kotak General Insurance which could raise as much as a few hundred million dollars, the report said quoting sources.
The process could draw potential strategic partners as well as financial investors, it said.
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“A deal would see the lender join a number of other Asian banks pursuing tie-ups for their insurance arms. These include Bank for Investment and Development of Vietnam JSC which is considering reviving the sale of its stake in a joint venture with Metlife Inc., and Indonesia’s PT Astra International is weighing options including a partial sale of its life insurance unit, Bloomberg News has reported. Dah Sing Financial Holdings Ltd. and Sun Life Financial Inc. announced a 15-year bancassurance partnership in Hong Kong last month,” the report said.
In another development, Kotak Mahindra Bank has fully acquired microlender Sonata Finance for Rs 537 crore. Global brokerages see up to 39 percent upside to the shares of Kotak Mahindra Bank largely on expectations that the acquisition of Sonata Finance would help the leading private bank expand its presence in the north and central parts of India.
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Kotak Bank on Friday announced the acquisition in an all-cash deal. The bank hopes to strengthen its lending to economically weaker and underserved households with the acquisition of Sonata Finance, which has a strong presence in the northern region.
Morgan Stanley in a note stated that the buyout is in-line with its guidance to increase share of unsecured book. US-based investment group Morgan Stanley has an ‘Equal-Weight’ call on the stock with a target price of Rs 2,215 per share, showing s 25 percent upside from the current trading price.
