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Centrum Group acquires FirstRand Bank’s India microfinance business

01 November, 2017

Financial services group Centrum Group has started its lending operations through the acquisition of Mumbai-based FirstRand Bank Ltd’s microfinance business in India.

The new entity, Centrum Microcredit Pvt. Ltd, has been set up as a step-down subsidiary of Centrum Capital Ltd.

FirstRand Bank, which is a subsidiary of South Africa-headquartered FirstRand Ltd, ran the microfinance business in Maharashtra, catering to about 70,000 customers, with an average ticket size of Rs 20,000. It had over 300 employees, the company said in a release.

Last year, FirstRand Bank had decided to shut down its four-year-old retail banking operations, citing limited growth opportunity in the short- to medium-term. It will, however, continue with its corporate lending and investment banking operations.

Centrum has been increasing its retail focus following the high-profile appointment of former Standard Chartered Bank Asia Pacific CEO Jaspal Bindra, as Centrum Group’s executive chairman.

Now, it plans to focus on providing loans to the un-served and under-served borrowers operating small businesses in semi-urban areas under the joint-liability-group model through its newly-formed microlending arm.

Centrum, which operates a fee-based model, had forayed into the lending business last year with housing and SME finance in Tier II and III cities.

“Financial inclusion is a key area that we are focusing on, and the acquisition of FirstRand Bank India’s microfinance business is a strategic step in our goal of providing finance to the urban poor and underserved sections of the society,” said Jaspal Bindra, executive chairman, Centrum Group.

“Besides acquiring the high quality loan portfolio, we plan to infuse additional capital to build this business and expand it to other states. We will also take on board the highly-skilled employees of the microfinance division of FRBI to helping us grow the business.”

“Following a decision, last year, to cease our retail banking operations, we are pleased to sell our micro finance business to the Centrum Group. We believe this is an excellent outcome for both customers and employees,” said Rohit Wahi, chief executive officer, FirstRand Bank.

The 40-year-old Centrum Group has been aggressively prioritising its business mix and has made senior hires and acquisitions to chase growth at a faster pace.

Earlier this year, Centrum had raised money by selling a minority stake in its wholly-owned subsidiary Centrum Direct to NYLIM Jacob Ballas India Holdings IV and Jacob Ballas Capital India Pvt. Ltd. Everstone Capital, which had invested in Centrum in 2008, had also sold a small chunk of its stake the company around the same time.

A Centrum Group subsidiary, Buyforex India Ltd, had acquired Krish And Ram Forex Pvt. Ltd from Business Match Services (India) Ltd.

Centrum Capital’s shares gained 4.95% to trade at 80.50 in the early hours of Wednesday in a positive Mumbai market.

Among other major deals in recent times, IndusInd Bank Ltd had agreed to buy microlender Bharat Financial Inclusion Ltd in an all-stock deal.

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Centrum Group acquires FirstRand Bank’s India microfinance business

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