CreditAccess Grameen to acquire Madura Micro Finance for Rs 876 crore

Microfinance institution CreditAccess Grameen (CAGL) on Wednesday said it will acquire 100 per cent stake in Chennai-based Madura Micro Finance (MMFL) in a two-step process for Rs 876 crore.

In the first leg, Bengaluru-headquartered CAGL will acquire up to 76.2 per cent stake for Rs 666.4 crore in MMFL from its existing shareholders for cash and in the second stage, MMFL shall be merged into CAGL through a scheme of arrangement, the company said.

"The acquisition strengthens our microfinance franchise which can be leveraged to provide innovative financial services and products matching the evolving needs of under-served and unbanked households," CAGL chairman, Paolo Brichetti said in a statement.

As part of the merger, the residual shareholders of MMFL will receive shares of CAGL at the share swap ratio proposed in the scheme of arrangement.

"The acquisition represents an immense opportunity to build an even stronger operating platform and leverage innovations in technology, data and analytics for the benefit of low-income rural households," MMFL chairman and managing director, Tara Thiagarajan said.

Thiagarajan will act as an advisor to the board of CAGL after the merger.

The business acquired from MMFL will continue to operate as a separate division until the integration of business and processes are complete.

All employees of MMFL will become employees of CAGL upon merger.

MMFL is the 11th largest NBFC-MFI in the country with gross loan portfolio (GLP) of Rs 2,053 crore, 11.1 lakh borrowers and 430 branches as on September 30, 2019.

The transaction is subject to all regulatory approval.

Microfinance industry's gross loan portfolio jumps 48% to Rs 2 trn in Q2

Microfinance industry's gross loan portfolio (GLP) grew by 47.85 per cent to Rs 2.01 lakh crore in the quarter ended September 30, 2019, compared to that of Rs 1.36 lakh crore in the year-ago quarter, says a report.

In the second quarter ended September 2019, the total number of microfinance loan accounts were at 9.79 crore as compared to 7.43 crore account in the year-ago period, according to a quarterly report by Microfinance Institutions Network (MFIN).

Since March 2017, which also marked the end of demonetisation period, an estimated 1.83 crore unique borrowers have been added, which is an average of 0.73 crore per year (CAGR of 16.87 per cent).

"In the last thirty months, an additional 18.3 million women have taken microfinance loans. This growth in unique borrowers is an endorsement of the unstinted trust that small borrowers have reposed on all RBI-regulated microfinance institutions," MFIN's chief executive Harsh Srivastava said.

The report said in terms of regional distribution of GLP, East and North-East accounts for 40 per cent, South 28 per cent, North 10 per cent, West 14 per cent and Central contributes 7 per cent.

The top 10 states constitute 82.7 per cent in terms of GLP.

Tamil Nadu is the largest state followed by West Bengal and Bihar.

Banks hold the largest share of the portfolio in micro-credit with a total loan outstanding of Rs 80,570 crore, which is 40 per cent of the total micro-credit universe.

NBFC-MFIs are the second largest provider of micro- credit with a loan amount outstanding of Rs 62,960 crore, accounting for 31 per cent to total industry portfolio.

Small Finance Banks (SFBs) have a total loan amount outstanding of Rs 34,829 crore with a total share of 17 per cent, NBFCs 11 per cent with a total loan outstanding of Rs 21,381 and other MFIs account for one per cent share in the microfinance universe.

As on September 30, 2019, the on-balance sheet portfolio of 85 NBFC-MFIs was Rs 62,960 crore which is spread across 601 districts of 35 states and union territories grew around 17 per cent over the last fiscal.

Of these 54 NBFC-MFIs members of MFIN received a debt funding of total Rs 9,443 crore during Q2 FY20, the report showed.

MFIN is an industry association comprising 56 NBFC- MFIs and 35 associates including banks, SFBs and NBFCs. It is also the self-regulatory organization (SRO) for the regulated NBFC-MFI.