Kotak Mahindra Bank said on Friday it would acquire Sonata Finance Pvt Ltd for 5.37 billion rupees ($65.04 million) in an all-cash deal, in a push to strengthen lending to economically weaker and underserved households.
The private sector bank will acquire 26.45 million equity shares of microfinance company Sonata, of face value 10 rupees each fully paid up, for a total consideration of approximately 5.37 billion rupees, the private lender said in an exchange filing.
With this, the bank will acquire 100% shareholding in Sonata.
This is not the first time that Kotak is making an entry in the microfinance space. In 2016, the bank had acquired BSS Microfinance in an all-cash deal for 1.39 billion rupees.
Sonata's acquisition provides a strong and vintage platform to enable the bank to become a significant player in the financial inclusion segment, said Kotak.
Sonata's network of 502 branches across 10 states is complementary to bank's microfinance branch network, it added.
"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," according to the filing.
The 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 added.
The transaction is subject to requisite approvals, including that of the Reserve Bank of India (RBI), Kotak said.