Mahindra Finance Forms Sri Lanka Joint Venture, Buys 58.2% Stake In Ideal Finance
Mahindra & Mahindra Financial Services Ltd. has entered the Sri Lankan market by striking a joint venture deal with that country’s Ideal Finance.
Mahindra Finance will invest 2 billion Sri Lankan rupees (about Rs 80 crore) until March 2021 to acquire up to 58.2 percent stake in Ideal Finance, the company said in a release on Tuesday.
The joint venture will capitalise on Mahindra Finance's 25-year expertise in financial services sector and Ideal Finance's domestic market knowledge to build a market leading financial services business in Sri Lanka, the Indian NBFC said.
"The strategic investment in Ideal Finance is a significant step in Mahindra Finance's global expansion strategy. The company has been looking at expanding its market overseas as part of its global growth strategy. Sri Lanka, with cultural and geographical similarity to India and its vibrant financial services market, emerged as the first choice," said Mahindra Finance.
With the Ideal Finance JV, Mahindra Finance aims to replicate its business model in Sri Lanka, it said, adding that the company has fuelled the entrepreneurial aspirations of over 6.2 million customers in over 3,70,000 villages in India. It has assets under management of over $10 billion.
"We believe that the Sri Lankan market holds great potential for growth. We are committed to bringing in the required capital and expertise to fuel this growth," said Ramesh Iyer, vice-chairman and managing director at Mahindra Finance.
"Ideal Finance shall be elevated to the Tier-1 category with this partnership in a short span of time,” said Chairman Nalin Welgama.
Ideal Finance, which started operations in 2012, focusses on the rural and semi-urban sectors in Sri Lanka, handing out loans for commercial trucks, cars, three-wheelers and two-wheelers. It also offers gold loans and personal loans.
It has an asset base of LKR 4.4 billion and an equity base of LKR 1.1 billion and as many as 10 branches in Sri Lanka.