RBI approves Kotak Mahindra Bank's acquisition of Sonata Finance

Private lender Kotak Mahindra Bank Ltd had entered into share purchase agreements with the shareholders of Sonata Finance Private Ltd, a non-banking finance company, to acquire a 100% stake for ₹537 crore. The bank says the RBI has also approved the Kotak Mahindra Bank-Sonata Finance deal, and now Sonata will be its wholly-owned subsidiary.

"The RBI has, vide its letter dated October 19, 2023, received by the Bank on October 19, 2023, conveyed its approval to the Bank, for acquiring 100% of the issued and paid-up capital in Sonata, as mentioned above, and to make Sonata a Business Correspondent subsidiary of the Bank. Upon completion of the aforesaid transaction (subsequent to receipt of other requisite approvals), Sonata will be a Wholly-Owned subsidiary of the Bank," Kotak Mahindra Bank says in a statement.

The bank also informed that Kotak Alternate Asset Managers Ltd, earlier known as Kotak Investment Advisors Ltd, a wholly-owned subsidiary of the bank, has acquired 1,29,870 compulsorily convertible preference shares (CCPS) of NKURE Therapeutics Pvt Ltd on October 18, 2023, upon the conversion of 10,00,000 compulsorily convertible debentures at a price of ₹77 per CCPS, acquiring 6.12% of the paid-up share capital of NKURE.

NKURE is principally engaged in undertaking research in using cells and their derivatives to generate therapeutic products to treat cancer and cancer-related pathology. "The investment would facilitate development by NKURE of novel therapeutic products for cancer," says Kotak Bank.

Kotak Mahindra Bank's profit after tax for Q1 FY24 stood at ₹3,452 crore, up 67% year-on-year from ₹2,071 crore in Q1 FY23. Net interest income (NII) for the said period increased to ₹6,234 crore, from ₹4,697 crore in Q1 FY23, up 33% YoY.

In FY23, the country's third largest bank logged a PAT of ₹14,925 crore, up 23% as compared to ₹12,089 crore in FY22, while NII surged 28% to ₹21,552 crore. The company is yet to disclose its Q2 FY24 financial results.

Kotak Mahindra Bank shares closed 1.8% up at ₹1,769.55 today after a weak opening. The stock surged to an intra-day high of ₹1,774.05 on the BSE, and its m-cap stood at ₹3,51,697.25 crore. Overall, the stock surged 0.96% in the past week; 0.75% in the past month; fell 6.55% in the past six months; and 3.08% in the year-to-date period.

The RBI last month gave its nod to the appointment of Dipak Gupta as the interim chief executive of Kotak Mahindra Bank for two months. His appointment came after Uday Kotak, the promoter and founder of Kotak Mahindra Bank, resigned as the CEO and MD, four months ahead of his retirement in September 2023.