Billionaire Gautam Adani-controlled Adani Group’s non-banking financial arm has acquired Essel Finance’s micro, small and medium enterprise (MSME) loan business.
Adani Capital Pvt. Ltd secured a loan book of about Rs 145 crore with this acquisition, it said in a statement. It didn’t give any other financial details.
Essel Finance’s MSME vertical has about 1,100 customers and 40 employees in 10 cities.
Adani Capital is a 100% subsidiary of Adani Finserve Pvt. Ltd, the holding company of Adani Group’s financial services business.
MGB Business Advisors Pvt. Ltd was the financial adviser on the transaction while Cyril Amarchand Mangaldas was the legal adviser, the statement added.
This is the second deal between Adani Group and media tycoon Subhash Chandra-controlled Essel Group. It comes at a time when Essel is trying to lower its debt burden, which stood at more than Rs 16,200 crore last year.
In August 2019, Adani Green Energy Ltd acquired 10 operating solar energy assets of the beleaguered Essel group’s Essel Green Energy Pvt. Ltd and Essel Infraprojects Ltd for an enterprise value of Rs 1,300 crore ($181 million) in an all-cash deal.
In December, it was reported that the Essel Group will sell the remaining under-construction 480 megawatt (MW) portfolio to Adani Green Energy.
The group is also in final talks to sell two road projects from its arm Essel Infraprojects to National Investment and Infrastructure Fund (NIIF) and its joint venture partner Roadis, according to a Mint newspaper report.
It is also planning to sell an additional 16.5% stake in Zee Entertainment Enterprises Ltd to financial investors OFI Global China Fund, LLC or its affiliates to repay loans.
As on December 31, 2019, the overall lending book of Adani’s NBFC and the housing finance business was Rs 1,100 crore with the latter contributing Rs 150 crore. The company has over 18,000 entrepreneur borrowers and homeowners across both the business. The gross non-performing assets (NPAs) as on December 31 end stood at a minuscule Rs 2.4 crore.
Adani Capital is focused on providing loans to small and micro-entrepreneurs for the purpose of income generation whereas Adani Housing Finance provides home loans to lower-income and economically weaker segments of society.
It has a presence in 56 branches spread across four states of Gujarat, Maharashtra, Rajasthan, and Karnataka while Adani Housing Finance has a presence in 27 branches spread across 3 states of Gujarat, Maharashtra, and Rajasthan
Gaurav Gupta, CEO at Adani Finserve, said the acquisition complements the firm’s existing MSME business and helps it to expand to new geographies including Noida and Chennai.
The decision to acquire is led by the fact that we operate in similar segments, which is secured lending focused on income-generating borrowers. It is an opportunistic acquisition, Gupta added.
Adani Finserve, which primarily operates in western India, is aiming to gradually expand its geographic presence in central and east India, targeting states like Madhya Pradesh, Chhattisgarh, and Orissa. Through geographic expansion and organic growth, the company expects the business to reach Rs 2,700-3,000 crore by the end of the next fiscal.