India’s Mahindra Finance Limited forms joint venture with Sri Lanka’s Ideal Finance Limited
India’s leading Non-Banking Finance Company (NBFC), Mahindra & Mahindra Financial Services Ltd. (Mahindra Finance), has reportedly entered into a joint venture with Sri Lanka’s Ideal Finance Ltd. (IFL).
IFL is a fully-owned subsidiary of one of Sri Lanka’s leading conglomerates, Ideal Group.
Mahindra Finance is to invest Rs. 2 billion until March 2021 for up to 58.2% stake in Ideal Finance.
The joint venture is expected to capitalise on Mahindra Finance’s 25-year expertise in the financial services domain and Ideal Finance’s domestic market knowledge to build a leading financial services business in Sri Lanka.
Mahindra Finance, India’s leading NBFC focused on rural and semi-urban markets, has been looking at expanding its market overseas as part of its global growth strategy and Sri Lanka, with its cultural and geographical similarity to India and its vibrant financial services market, emerged as the first choice, the local media has reported.
According to reports, Mahindra Finance through this joint venture aims to replicate in Sri Lanka its successful, socially-inclusive business model and the company has created unique products designed around the evolving needs of the customer, and delivers these through a wide network of branches and the optimum use of technology. Mahindra Finance has fuelled the entrepreneurial aspirations of over 6.2 million customers in over 370,000 villages in India, and manages an asset under management of over US$ 10 billion.
Meanwhile, IFL reportedly has an asset base of Rs. 4.4 billion and an equity base of Rs. 1.1 billion. It has 10 branches, of which nine are outside the Western Province, located in Jaffna, Anuradhapura, Kurunegala, Bandarawela, Embilipitiya, Monaragala, Elpitiya, Matara, and Kandy.
Mahindra Finance Vice Chairman and Managing Director Ramesh Iyer has been quoted as saying, “Mahindra Finance, with its strong financial services expertise and innovative products, has added value to the lives of millions of customers, both in India and in a developed market like the US. We believe that the Sri Lankan market holds great potential for growth.
“Ideal Finance, with its knowledge, highly experienced team, and widespread network, is the right partner to help us create a leading financial services company in Sri Lanka. We see a strong, long-term growth opportunity in this market, and are committed to bringing in the required capital and expertise to fuel this growth.”
IFL Chairman Nalin Welgama has been quoted in the media as saying, “At a time where NBFIs are pressured by low economic growth and flagging vehicle sales, I welcome the timely entry of Mahindra Finance to Sri Lanka. They bring with them most invaluable sector exposure, vision, and life blood in terms of capital infusion to Ideal Finance.”
OSL take:
There have been many joint ventures and business partnerships formed between Sri Lankan and Indian companies. Sri Lanka and India enjoy strong bilateral and trade ties that have been further strengthened by a free trade agreement. Sri Lanka’s close proximity to India, the ease of doing business environment in Sri Lanka and the many trade agreements as well as trade concessions enjoyed by the country has made the island an attractive business destination to many Indian businesses/investors. Therefore, Indian businesses have shown keen interest in exploring business/investment opportunities in Sri Lanka while also looking at business partnerships. Local companies could confidently explore business counterparts in India to further expand their businesses in the region. On the other hand, businesses/investors of other foreign nations interested in doing business with India could explore the possibility of doing so by setting up base in Sri Lanka and utilizing the preferential treatment enjoyed in India by the island.
Article Code : | VBS/AT/22082019/Z_2 |