Bids to buy Chennai-based micro lender Madura Microfinance is intensifying with a US private equity fund matching first suitor Federal Bank’s offer, and the close race underlined the potential of the industry, two senior people close to the development said.
They said that Federal Bank was ready to pay about Rs 720-750 crore to fully acquire the MFI with a loan portfolio of Rs 1184 crore.
Several private banks are acquiring MFIs fully or taking a strategic stake to expand their presence in the rural areas. IndusInd Bank was the latest to buy out Bharat Financial Inclusion, the largest micro lender in the country. The microfinance sector clawed back strongly from last year’s disruptions caused by demonetisation and Goods and Services Tax implementation raising renewed investor interest.
Madura Microfinance was founded by late banker-turned-entrepreneur KM Thiagarajan and is now run by his non-resident Indian, neuroscientist daughter Tara Thiagarajan. Private equity firm Elevar Equity Mauritius is a key investor. The MFI has a 250-plus rural and semi-urban branch network in Tamil Nadu, Maharashtra, Karnataka, Kerala, Bihar and Odisha. It clocked a net profit of Rs 30 crore last year.
Tara Thiagarajan held 36.46% in Madura at the end of March 2017 while total promoters’ holding was 46.08%. Elevar Equity Mauritius held 12.93% in the same period. Other corporate bodies and individuals held 25.53% and 15.46%, respectively.
Sources close to the matter said that Madura had a few other suitors including a mid-sized MFI. However, only Federal Bank and the PE firm are in the race at present.
