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.
Source: Business-Standard