Kotak Mahindra explores takeover of IndusInd bank

Kotak Mahindra Bank Ltd., backed by Asia’s richest banker, is exploring a takeover of smaller Indian rival IndusInd Bank Ltd., folks with data of the matter stated, a transfer that will create the nation’s eighth-largest monetary agency by belongings.

Uday Kotak, founder and chief govt officer of Kotak Mahindra, is taking a look at the potential for an all-stock acquisition, one of many folks stated, asking to not be recognized because the talks are non-public. Uday Kotak and the Hinduja household have held preliminary talks over the proposal through which the founders of IndusInd Bank may retain a stake within the lender after a deal, one other particular person stated.

A deal would cement Kotak Mahindra’s place as one among India’s main non-public banks, boosting its belongings by about 83%. It would additionally throw a lifeline to IndusInd, which has seen its market worth drop 60% to $6 billion this 12 months after being hit by issues over worsening asset high quality and an erosion of low-cost deposits. Kotak in 2014 acquired the native unit of ING Groep NV for 150 billion rupees ($2 billion) within the largest takeover of a lender in India.

Deliberations are at an early stage and talks may fall by way of, the folks stated.

Kotak Mahindra’s spokesman declined to remark. IndusInd “completely denies the said rumor and considers it malicious, untrue and baseless,” the financial institution’s exterior spokesman stated in an e-mail, including the founders “reiterate their full support to IndusInd Bank, now and always.”

The U.Okay.-based Hinduja household started discussions for promoting management of the Mumbai-based lender following a dispute between the 4 brothers over the way forward for the household’s $11.2 billion fortune, one of many folks stated.

India’s central financial institution earlier this 12 months pushed again on the Hinduja brothers’ plan to boost stake in IndusInd, folks with data of the matter stated in June.

Kotak Mahindra’s 2.7 trillion rupee market capitalization makes it India’s third-largest lender by worth.

IndusInd’s shares have fallen 64% up to now 12 months as traders fretted over the founders borrowing cash towards its shares, worsening asset high quality, and erosion of low-cost deposits. The brothers have since repaid the mortgage backed by shares of the financial institution.