Mahindra & Mahindra Financial Services Ltd (Mahindra Finance) has pitched into a joint venture with Ideal Finance Ltd., an entirely controlled subsidiary of the preeminent Sri Lankan conglomerate, Ideal Group. Until March 2021, Mahindra Finance will invest LKR 2 billion (Rs 80.49 crore) for up to a 58.2% stake in Ideal Finance.
The joint venture will capitalize on Mahindra Finance’s 25-year expertise in the financial services field and Ideal Finance’s domestic market intelligence to develop a foremost financial services business in Sri Lanka.
Mahindra Finance, India’s preeminent NBFC focused on rural and semi-urban markets and has been looking at extending its market abroad as part of its global growth strategy. With its cultural and geographical identity to India and its throbbing financial services market, Sri Lanka appeared as the first choice. With this joint venture Mahindra Finance endeavours to replicate in Sri Lanka, its thriving, socially comprehensive business model.
The company has devised unique products created around the customer’s evolving requirements and delivers them through a comprehensive network of branches and the excellent use of technology. Mahindra Finance has kindled the entrepreneurial ambitions of over 6.2 million customers in over 370,000 villages in India and operates an AUM of over USD 10 Billion.
Ideal Finance Ltd. (IFL), a non-banking financial Institution enrolled with the Central Bank of Sri Lanka initiated operations in March 2012 with a precise focus on rural and semi-urban sectors. Its lending portfolio incorporates commercial trucks, motor cars, three-wheelers, two-wheelers, gold loans and personal loans, speculating the representation of the market segment focused on by IFL. A unique feature of IFL is that it has progressed over the past seven years with a qualified lending portfolio and an annual sustainable growth in profitability as a financial institution. IFL has an asset base of LKR 4.4 billion and an equity base of LKR 1.1 billion. It has ten branches, of which nine are outside the western province established in Jaffna, Anuradhapura, Kurunegala, Bandarawela, Embilipitiya, Monaragala, Elpitiya, Matara & Kandy. Its current staff strength is 142, a majority of which are based in the branches.
Ramesh Iyer, Vice-Chairman & Managing Director, Mahindra Finance, stated “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.”
V. Ravi, Executive Director & Chief Financial Officer, Mahindra Finance, stated “The foundations of the financial services business are trust and transparency. The Mahindra Group is known for its high standards of governance. I am certain that together Ideal Finance and Mahindra Finance will build a leading financial services business, which will be a gold standard for best governance in the NBFI industry.”