Kotak Mahindra Bank Ltd. is on the hunt for acquisitions as the billionaire Uday Kotak-backed lender looks to deploy its excess capital to scale up in India's rapidly transforming financial industry.
The bank, India's fourth-largest private sector lender by assets, is open to evaluating potential targets that align with its strategy, according to CEO Ashok Vaswani.
Vaswani, who took charge in January 2024, said the bank has the capacity to do 'jumbo deals' worth over $1 billion, citing its significantly higher capital levels than regulatory requirements.
The bank looks at three criteria when studying M&A: whether it adds to its agenda, if the valuation makes sense, and the cost of management distraction, according to Vaswani.
Kotak Mahindra Bank had a capital-to-risk ratio of 22.6% at the end of December, well above peer levels and regulatory requirements, signaling it has ample firepower for potential takeovers.
Vaswani said the bank will remain 'opportunistic' on inorganic expansion but prioritizes internal growth. The lender has struck deals, including buying a personal-loan portfolio from Standard Chartered Plc and acquiring micro lender Sonata Finance in 2024.
Analysts said the bank has found it challenging to deploy its extra capital in recent years, with limited opportunities and targets available for making jumbo deals.
