India Infoline Finance Ltd will acquire Samasta Microfinance Ltd to enter the microfinance segment and extend its offerings, the non-banking finance company’s parent said on Thursday.
IIFL Holdings Ltd said in a stock-exchange filing that the Reserve Bank of India has given in-principle approval for unit India Infoline’s planned acquisition of the Bengaluru-based microlender. The all-cash deal is likely to be completed within six months, it said, without disclosing the deal value.
The deal is subject to completion of necessary due diligence, regulatory and other internal approvals.
Samasta was founded by first-generation entrepreneurs Narayanswamy Venkatesh and Deviah Shivaprasad. It began operations as a microfinance institution in March 2008 and operates in Tamil Nadu, Karnataka, Maharashtra and Goa through 64 branches. The microlender had about Rs 100 crore in assets under management as on 30 September 2016.
The proposed acquisition of Samasta will help IIFL to enter into microfinance segment and extend its financial services products to the customer base of India Infoline Finance.
Samasta was incorporated in 1995, however, it began MFI operation in 2008. It reported an income of Rs 13 crore as on March, 2014, Rs 13.24 crore on March 2015, and Rs 20.14 crore as on March 2016.
The company had an outstanding loan portfolio of Rs 64.53 crore as of March 2014, Rs 71.9 crore as on March 2015 and Rs 96.3 crore as on March 2016.
When contacted, Venkatesh said Samasta raised Rs 2 crore in December 2009 from Kalpathi Investments Pvt. Ltd, which owned 15% in the firm and raised another Rs 1.5 crore from SIDBI, which owned about 16-17% in the company.
It has about 400 employees.
Deals in MFI space
Microfinance companies have emerged as an attractive target for both full-service banks and other non-banking finance companies.
Early this month, Au Financiers decided to sell its stake in Gujarat-based M Power Micro Finance Pvt. Ltd to comply with the regulatory requirement for becoming a small finance bank.
In September, Kotak Mahindra Bank Ltd (Kotak) acquired BSS Microfinance Pvt. Ltd (BSS) for Rs 139.2 crore ($21 million) in cash. The country's fourth-largest private lender said it will buy 99.49% of the Bangalore-based micro-lender from existing shareholders. BSS, which would become a subsidiary of the bank, had a net worth of approximately Rs 73 crore and a microfinance loan book of Rs 483 crore as of 30 June, 2016.
IDFC Bank picked a 9.99% stake in ASA International India Microfinance Pvt. Ltd for Rs 8.5 crore ($1.3 million) early this year.
In July, IDFC Bank acquired Tamil Nadu-based Grama Vidiyal Micro Finance Ltd as it was planning to become a mass retail bank with a significant footprint and customer base in five years. The micro-lender operates in 319 locations across 65 districts in six states.
Another private lender RBL Bank picked around 10% stake in Varanasi-based Utkarsh Micro Finance Pvt. Ltd which is in transition to become a small finance bank. The investment by RBL Bank will make it a preferred partner and will help meet the future lending requirements of Utkarsh as a small finance bank.
In another deal, financial services firm Manappuram Finance Ltd acquired 70% stake in Asirvad Microfinance Pvt. Ltd in December 2014.
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