Kotak Mahindra Bank
Kotak Mahindra Bank
is a large Indian banking company. It is a very diverse banking group, handling business such as savings accounts, car finance and mortgages as well as wealth management and investment banking.
It is a relatively new banking operation, having only received a banking license in 2003. It was founded in 1985 and had from that point until 2003 been known as Kotak Mahindra Finance Limited, and had offered non-banking financial services such as loans and large savings accounts.
Kotak has engaged in investment banking activity since 1991. It is known as the Kotak Mahindra Capital Company, or KMCC. As well as its head office in Mumbai, it has offices in Delhi and Bangalore. It also has offices in the financial centers of London and New York as well as Mauritius, Dubai and Singapore with their large and wealthy ethnic Indian populations. It offers the same services one would expect of a small generalist investment bank, including issuing equities, private equity advice, advising on both mergers and recapitalization and helping infrastructure investment projects. It has to its name a number of Indian records including the largest equity issue and the largest initial public offering. It has also introduced a number of equity issue techniques to India.
Kotak Mahindra has for a long time had a close relationship with the leading American investment bank, Goldman Sachs
. Goldman Sachs was for many years anxious to break into large Asian markets like India. Due to a rather protectionist economic regime they thought that it would be more prudent to enter the market as a partner with an established local presence. Their choice was an ambitious, young and rapidly growing bank, Kotak Mahindra.
Goldman Sachs took out 25% stakes in two Kotak Mahindra companies, the Kotak Mahindra Capital Company and Kotak Securities
. It also helped launched the India Growth Fund, Kodak’s private equity fund. In 2006 Goldman Sachs reassessed its involvement in Asian markets and decided to sell all its minority interests to Kotak Mahindra, and as a result most of the ventures with the Kotak Mahindra name are now wholly owned by the Kotak Mahindra group. This ended a fourteen year partnership with Goldman Sachs.
The international strategy is now to start a number of partnerships with similar domestically grown bank. One example of this is the Russian home grown investment bank, Renaissance capital.
There is a separate stock broking company, Kotak Securities
. This has been separately incorporated since 1995. Kotak Securities portrays itself as the leading stock broking house in India. There is also the related Kotak Mahindra Asset Management Company, which serves investment funds and was launched in 1998.
The Kotak Mahindra bank aims itself squarely at the rapidly growing Indian middle class, aiming to deal with a large amount of financial needs. Although it aims to be a full service bank that aims to provide for all its customers’ needs, it has a very aggressive marketing campaign and claims that it can “make money simple”. It has been one of the largest issuers of credit cards in India. Due to the nature of the Indian middle class it also has a large wealth management department, which aims at a nation that has traditionally been wary of keeping large savings in institutions. It is seen as the flagship of the whole Kotak Mahindra group.
The bank was founded by the Indian entrepreneur Uday Kotak, who still owns half of the bank. He is estimated by Forbes to be worth $2.2 billion and is one of the richest people in the world. As an entrepreneurial and growing bank it has created a stir in a traditionally segmented financial industry.
The bank has a strong emphasis on employee participation having an extensive employee share ownership scheme.
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