Mahindra & Mahindra Financial Services (Mahindra Finance) on Tuesday said it has entered into a joint venture deal with Sri Lanka's Ideal Finance to acquire up to 58.2 per cent stake in the company for LKR 2 billion (nearly Rs 80 crore).
Mahindra Finance will invest LKR 2 billion until March 2021 for up to 58.2 per cent stake in Ideal Finance, it said in a release.
The rural and semi-urban focussed non-banking financial company (NBFC) said the joint venture (JV) will capitalise on Mahindra Finance's 25-year expertise in the financial services domain and Ideal Finance's domestic market knowledge to build a market leading financial services business in Sri Lanka.
"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 its cultural and geographical similarity to India and its vibrant financial services market, emerged as the first choice," it said.
With this 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 manages assets under management (AUM) of over USD 10 billion.
Ideal Finance Ltd (IFL) focusses on rural and semi-urban sector, caters to commercial trucks, motor cars, three-wheelers, two-wheelers, gold loans and personal loans.
IFL, which started operations in 2012, has an asset base of LKR 4.4 billion and an equity base of LKR 1.1 billion and as many as 10 branches.
"We believe that the Sri Lankan market holds great potential for growth. 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," said Ramesh Iyer, vice-chairman and managing director, Mahindra Finance.
Ideal Finance Ltd Chairman Nalin Welgama said: "Ideal Finance shall be elevated to a tier-1 category with this partnership in a short span of time."
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