India’s Mahindra increases stake in Sri Lanka’s Ideal Finance
India’s Mahindra & Mahindra Financial Services has reportedly completed the acquisition of 20% additional equity stake in Sri Lanka’s Ideal Finance from existing shareholders. This has increased Mahindra’s stake in Ideal to 58.2%.
Ideal Finance has now become a subsidiary company of Mahindra Finance and the Sri Lankan entity is the second subsidiary of MFS with the other being Mahindra Finance USA, LLC, local media reports stated.
According to reports, Mahindra Finance has entered Sri Lanka in August 2019 with an agreement with conglomerate Ideal Group to acquire up to 58% in stages in Ideal Finance with an investment of Rs. 2 billion.
Existing shareholders who sold down include Ideal Holdings Ltd., which initially held 51%, Ideal Motors (25%) and Viraj Malawana (11.56%) among few others.
India’s Economic Times has stated that with the increase in stake Mahindra Finance has put together a strategy to make Sri Lanka a preferred market going ahead.
The report has stated that the joint venture will 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. The strategic investment in Ideal Finance was also described as a significant step in Mahindra Finance’s global expansion strategy.
Mahindra Finance is one of India’s leading non-banking finance companies. Focused on the rural and semi-urban sector, the Company has over 7.3 million customers and has an Assets Under Management of over US$ 11 billion. The Mahindra Group is a US$ 19.4 billion federation of companies and enjoys a leadership position in utility vehicles, information technology, financial services and vacation ownership in India and is the world’s largest tractor company by volume. It also enjoys a strong presence in renewable energy, agribusiness, logistics and real estate development. Headquartered in India, Mahindra employs over 256,000 people across 100 countries, media reports stated.
Set up in 2012, Ideal Finance (IFL) is a non-banking financial institution registered with the Central Bank of Sri Lanka, with a clear focus on the rural and semi-urban sectors. Its lending portfolio consists of commercial trucks, motor cars, three-wheelers, two-wheelers, gold loans and personal loans.
The move by Mahindra from India to increase it’s stake in a Sri Lankan company is indicative of the strength and growth of the country’s private sector. It also shows the interest shown by Indian business entities to invest in Sri Lankan companies. Sri Lanka’s economy has shown great resilience to external and internal challenges through the years and is once again on the path to recovery after facing the impact of the global Covid 19 pandemic. Even amidst the pandemic, key economic sectors in Sri Lanka have shown a growth momentum. The island is also emerging as a business destination in the South Asian region given it’s geographical positioning in the Indian ocean and the many trade agreements as well as tradeconcessions enjoyed by the country. Given the positive movement and expansion of Sri Lanka’s economy, foreign businesses/investors could confidently explore business/investment opportunities in the country, especially businesses/investors from India.
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