Bharat Financial Inclusion Ltd, India’s first microlender to go public, is open for a complete takeover or a partial stake sale to a strategic investor such as a bank to create value for its stakeholders and increase market penetration, a top executive said.
A consultant is evaluating all options including a share swap or an all-cash deal, Managing Director MR Rao said in a report by The Economic Times.
IDFC Bank, IndusInd Bank and RBL Bank are in talks with Bharat Financial to this end, the report said.
“A lot of discussions are going on (with these three private banks). We have no bias on any bank. What we are looking at is that which bank would be best suited for the interest of the stakeholders – the customers, shareholders and employees,” Rao was quoted as saying.
Rao said the idea of striking strategic deals with banks came when it was mulling to engage neighbourhood retail stores to provide cash-in and cash-out facilities to borrowers.
“We are open to partnership with banks on the premise that both customers and kirana stores should have bank accounts to run this process. We are open if a bank wants to provide the facility without any stake sale. We are also happy if the partner bank wants a 10% equity,” Rao added.
Both RBL Bank and IDFC Bank have previously acquired stakes in other microfinance companies.
RBL Bank has acquired a stake in Varanasi-based Utkarsh Micro Finance Pvt. Ltd and Swadhaar FinServ Pvt. Ltd. IDFC Bank has picked up a stake in ASA International India Microfinance Pvt. Ltd and acquired Trichy-based Grama Vidiyal Microfinance.
The microfinance industry has faced rough weather over the past few months, with the government’s demonetisation drive and elections in a few states putting the brakes on growth.
The inability to tap private equity investors by fund-starved small- to medium-sized microfinance companies has created a market full of attractive targets for banks and non-banking financial companies (NBFCs), which are seeking new avenues of growth as well as trying to tide over the competition from the small finance banks.
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