Kotak Mahindra Bank, backed by Asia’s richest banker, is exploring an acquisition of a smaller Indian rival IndusInd Bankpeople with knowledge of the matter said. The move would create the eighth largest financial firm in the country by assets.
Uday Kotak, founder and CEO of Kotak Mahindra, is looking at the possibility of a full share takeover, said one of the people, who asked not to be named as the talks are private. Uday Kotak and the Hinduja The family has had initial talks about the proposal that IndusInd Bank’s founders could retain a stake in the lender after a deal, another person said.
An agreement would consolidate Kotak Mahindra’s position as one of India’s leading private banks, increasing its assets by approximately 83%. It would also launch a lifeline for IndusInd, which has seen its market value drop 60% to $ 6 billion this year after being hit by concerns about worsening asset quality and the erosion of low-cost deposits. . In 2014, Kotak acquired the local unit of ING Groep NV for 150 billion rupees ($ 2 billion) in the largest acquisition by a lender in India.
The deliberations are at an early stage and the talks could fall apart, the people said.
The Kotak Mahindra spokesman declined to comment. IndusInd “completely denies said rumor and considers it malicious, false and baseless,” the bank’s external spokesperson said in an email, adding that the founders “reiterate their full support for IndusInd Bank, now and forever.”
The UK-based Hinduja family began discussions to sell control of the Mumbai-based lender following a dispute between the four brothers over the future of the family’s $ 11.2 billion fortune, he said. one of those people.
The RBI earlier this year rejected the Hinduja brothers’ plan to increase their stake in IndusInd, people with knowledge of the matter said in June.
Kotak Mahindra’s Rs 2.7 trillion market capitalization makes it the third largest lender in India by value.
IndusInd shares have fallen 64% last year, as investors worried that the founders borrowed money against their shares, deteriorated asset quality and eroded low-cost deposits. Since then, the brothers have repaid the loan backed by shares in the bank.
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