Kotak Mahindra Bank to acquire 9.9% in KFin

Target Date - October 31, 2021

Kotak Mahindra Bank (KMB) has agreed to acquire 9.98% in KFin Technologies Private Limited (KFin) for a cash consideration of Rs 310 crore. Funds will be infused directly into the company via fresh share issue.

Key points to note –

  • KFin was earlier known as Karvy Fintech. However, in December 2019 it renamed itself to KFin Technologies to disassociate itself from the tainted Karvy brand.
  • The Company is majorly owned (84%) by General Atlantic. They had picked up the stake in November 2018 for Rs 2,000 crore.
  • KFin offers end-to-end services to mutual fund investors and distributors, besides offering corporate registry, back-office operation and data processing services. KFin serves 25 of 44 Indian mutual funds which have over $148 billion in AUM and 35% market share in equity AUM.
  • It is also a central record-keeping agency for the National Pension System. Besides, it provides services to alternative investment funds, ETFs and insurance companies
  • Earlier in June 2021, the CEO had indicated that the Company is looking to expand through inorganic route and would target 2-3 M&A deals every year with a ticket size of $10-40 mn each. In May, KFintech had picked up a 17% stake in Artivatic.ai for an undisclosed amount to enter the insurtech space.
  • KMB’s investment values the KFin at about Rs 3,106 crore. This is 6.5x of KFin’s FY 2021 turnover of Rs 481 crore.

It looks like a great pick for Kotak. Fintech is a sector with great potential and given the current environment, it doesn’t seem an expensive pick at all.

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