M&M Finance seeks to double the assets under management of a Lankan company

Mahindra & Mahindra Financial Services Ltd (MMFSL) is seeking to double the assets of its Sri Lankan subsidiary Ideal Finance Ltd to Rs 16 billion over three to five years.

The entity was rebranded as Mahindra Ideal Finance, where MMFSL increased its stake from 38% to just over 58% in July 2021.

Ramesh Iyer, Vice President and Managing Director of Mahindra Finance, said: “Mahindra Finance is looking to expand into Asia. This strategic partnership with the Ideal Group of Sri Lanka is an important step in this direction. The strategy is to work with local partners to strengthen the presence of companies. The company is exploring prospects for commercial presence in Bangladesh.

In addition to vehicle financing, it is planned to provide housing financing and insurance distribution. It would take a call to enter the mutual fund segment in Sri Lanka at a later date, he added.

On capital injection to support business growth, Iyer said Mahindra Ideal Finance has a capital adequacy of 34%. This capital base and retained earnings will support the growth of the business. Any additional capital requirement would require a call after one or two years.

The rebranded entity will offer a wider range of products to include gold loans, personal vehicle leases, and consumer and personal loans. The company also aims to expand its branch network and improve its digital footprint across the island to serve its customers as close to their doorstep as possible.

MMFSL also has a joint venture with the Rabobank group for operations in the United States of America. It also offers wholesale inventory financing to dealers and retail financing to customers for the purchase of Mahindra Group products.

Iyer said the US unit had a balance sheet of $1 billion and a return on assets of eight to nine percent. Growth is supported by accumulated profits.

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