Kotak Mahindra Bank buys BSS Microfinance

Kotak Mahindra Bank buys BSS Microfinance

Kotak Mahindra Bank (KMB) has decided to acquire 99.49% of Bengaluru-headquartered non-banking finance company BSS Microfinance (BSS) for an aggregate all-cash consideration of Rs 139.2 crore.

As of June 30, 2016, BSS has a networth of approximately Rs 73 crore and microfinance loans of Rs 483 crore in its books. It will be a subsidiary of Kotak after receiving regulatory and other approvals. BSS has a commercially established model in the microfinance segment. This acquisition gives Kotak access to BSS’s growing customer base, which currently stands at over 2,17,000 and network of 78 branches (as of June 30, 2016), the Mumbai-based bank said.

This acquisition offers Kotak a deeper reach in the low income segment, and also increases the access of BSS’s customer base to Kotak’s wide array of products and services. Further, BSS’s loan book also qualifies for priority sector lending. Kotak and the BSS team will leverage their combined experience to scale up the existing platform, KMB said.

Deloitte Touche Tohmatsu India and M2i Consulting undertook the financial and business due diligence review, Cyril Amarchand Mangaldas was the legal advisor and Kotak Mahindra Capital Company was the investment banker for Kotak Mahindra Bank for the deal.

“Financial inclusion is one of the imperatives of our country, and this acquisition is a testimony of our commitment to cater to the needs of weaker sections of society in a commercially viable manner. BSS is of the right size, culturally compatible with Kotak, and has proven its processes and value systems over a decade,” Kotak Mahindra Bank commercial banking president Narayan SA said.

“Until now, we have been hobbled with constraints of equity capital. The deal not only helps us overcome this constraint but also allows us to offer savings products in conjunction with Kotak Mahindra Bank, once the deal is consummated,” BSS Microfinance chairman and managing director Ramesh Bellamkonda said.

“We will now be able to expand, and provide better products and services to both existing and new clients across the country. I am excited about the prospect that we can now play a more meaningful role to alleviate poverty in our country, much better than we have done so far,”  Bellamkonda added.

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