Business · Companies · 3 hrs ago
Indian banks fund more than ₹10,000 crore in acquisitions after RBI rule change
Indian banks have financed about a dozen acquisition deals since the RBI eased takeover-funding rules on July 1.
The deals involve more than ₹10,000 crore in funding, according to people familiar with the transactions.
Lenders can now fund up to 75% of eligible deal values, subject to borrower and risk requirements.
The change applies to acquisitions of listed and unlisted companies, and gives domestic banks a larger role in a market once served mainly by overseas lenders and private credit funds.
State Bank of India is among the most active lenders, while HDFC Bank, Kotak Mahindra Bank, ICICI Bank, Axis Bank and RBL Bank have also taken part.
The potential acquisition-financing market is estimated at nearly ₹2 lakh crore, creating an opportunity for banks to earn fees and offer related services as well as loans.
More acquisition deals may bring further financing demand, though no specific next transaction is set out.
Indian banks have financed about a dozen mergers and acquisitions involving more than ₹10,000 crore since the central bank eased takeover-financing rules.
The revised rules, effective July 1, allow domestic lenders to finance up to 75% of an eligible acquisition’s independently assessed value.
State Bank of India has been among the most active lenders, with nearly a dozen transactions completed or in execution.
Other participating lenders include HDFC Bank, Kotak Mahindra Bank, ICICI Bank, Axis Bank and RBL Bank, alongside foreign banks.
Industry estimates put the potential acquisition-financing market at nearly ₹2 lakh crore.
- Who
- Indian banks, including State Bank of India and other domestic lenders, have financed the deals.
- What
- Banks have provided more than ₹10,000 crore in acquisition financing across about a dozen M&A deals.
- When
- Since the revised central bank rules took effect on July 1.
- Where
- India.
- Why
- The central bank eased restrictions on domestic banks financing acquisitions, allowing them to lend up to 75% of eligible deal values.
This story does not have two clearly opposing sides.
The central bank’s revised takeover-financing rules took effect.
Banks closed more than a dozen acquisition-financing transactions, according to Kotak Mahindra Bank’s corporate and transaction banking head.
Economic Times reported that banks had financed about a dozen M&A deals involving more than ₹10,000 crore.
- Total acquisition funding
- More than ₹10,000 crore
- Deals financed
- About a dozen
- Financing limit
- Up to 75% of independently assessed acquisition value
- Estimated potential market
- Nearly ₹2 lakh crore
- Largest named deal
- Crystal Crop Protection’s ₹2,268-crore acquisition of FMC Corporation’s India business
What people are saying
Demand for acquisition financing is picking up, with over a dozen transactions closed with various banks since July.
Depending on the size of the transaction, we at Kotak either fully fund it from our balance sheet or we underwrite and syndicate it.
Every buy or sell side M&A advisory mandate is a financing opportunity for the bank.
These acquisition-finance transactions also generate strong cross sell business, including escrow accounts for funding, demat services for shares, and foreign exchange-particularly with private equity investors or overseas strategic players as buyers or sellers.