Business News from Sri Lanka: India’s Mahindra & Mahindra Financial Services Ltd will invest Rs. 700 million next month as part of a 58.2 percent stake in Ideal Finance Ltd, an Ideal Group subsidiary.
India’s leading Non-Banking Finance Company (NBFC) — In 2020 and March 2021, Mahindra Finance will spend an additional Rs. 1.300 million in two installments to complete the agreement with a total Rs. 2 billion investment.
“We think the Sri Lankan industry has excellent growth potential and we see a long-term growth chance in this industry and are dedicated to bringing in the resources and knowledge needed to fuel this development,” said yesterday in Colombo Vice-President & Managing Director, Mahindra Finance, Ramesh Iyer.
“The joint venture will capitalize on the 25-year long expertise of Mahindra Finance in the financial services domain and the national market understanding of Ideal Finance to build a market-leading Sri Lankan financial services company,” he added.
He also said that after the United States, Sri Lanka is the third nation to launch its economic unit. “This strategic investment in Ideal Finance is a significant step in Mahindra Finance’s global expansion strategy.” “Mahindra Finance has fueled the entrepreneurial aspirations of over 6.2 million customers in over 370,000 villages in India, and manages an AUM of over USD 10 billion”.
Chairman, Ideal Finance Ltd., (IFL) Nalin Welgama, said at a time when NBFIs are under pressure from low economic growth and flagging car sales, Mahindra Finance’s timely introduction to Sri Lanka is a beneficial initiative.” “It brings with it the most invaluable industry exposure, vision and capital infusion to Ideal Finance, which would, in turn, be loaned primarily to local SMEs.
This would primarily be for vehicle leases, but they would not only be limited to Mahindra cars. “IFL has a Rs. 4.4 billion asset base and a Rs. 1.1 billion equity base. “All NBFIs have a core capital requirement of Rs. 2.5 billion by 1 January 2021 and this partnership would allow Ideal Finance to be raised to a Tier1 category within a brief period of time.
Aravinda De Silva, Deputy Chairman of Ideal Group, said, “We think this collaboration will be instrumental in bringing a new dimension to the NBFI industry in Sri Lanka, which has been looking forward to consolidation, technology and governance for the previous two centuries.” Ideal Group is connected with its JV assembly plant in Matugama last week as a partner of the Mahindra Group in Sri Lanka for the automotive sector.
