As per the information mentioned on Bloomberg, Asia’s richest banker, Uday Kotak, Founder and Chief Executive Officer of Kotak Mahindra, is exploring a takeover for a smaller Indian rival IndusInd Bank Ltd. The people who have the knowledge of the respective matter said that this initiative would create the nation’s eighth-largest financial firm by assets.
Uday Kotak is looking at this possibility of an all-stock acquisition. There have been some initial talks between Uday Kotak and the Hinduja family over the proposal of this matter. As the discussions are private, one of the people said that the Indusland owner can retain a stake in the lender after a deal.
In early Mumbai trading on Monday, shares of Indusland jumped as much as 4.1% and the shares of Kotak Mahindra slipped by less than 1%.
This deal would make Kotak Mahindra’s position as one of India’s leading private banks that will ultimately boost its sales by 83%. Indusland will get a new life as its market value has dropped by 6% to $6 million as the asset quality worsening and erosion of low-cost deposits were also created. Kotak in 2014 acquired the local unit ING Groep NV for 150 billion rupees ($2 billion).
The officials’ statements
IndusInd “completely denies the said rumor and considers it malicious, untrue and baseless,” the bank’s external spokesman said in an email, adding the founders “reiterates their full support to IndusInd Bank, now and always.”
The UK-based Hinduja family began their discussions for the selling control of the Mumbai-based lender which was followed by a dispute amongst the four brothers regarding the future of the family’s fortune of $11.2 billion.
The Hinduja brothers’ plan to stake Indusland was pushed back by the Central Government of India.
2.7 trillion rupee market capitalization of Kotak’ Mahindra makes it India’s third-largest lender by value.
In the past year, Indusland’s shares have fallen by 64% as the investors were troubled over the founders’ borrowed money. The brothers have repaid the money as it was backed by the shares of the bank.