CreditAccess Gramee to acquire Madura Microfinance

KOLKATA: Microfinance firm CreditAccess Grameen Ltd (CAGL) has announced its plan to acquire Madura Microfinance and merge it with itself to consolidate its leadership position.
The largest microfinance firm in terms of outstanding loans said Wednesday that it would purchase 100% stake in Madura in a two-step process. In the first leg, it will acquire up to 76.2% stake Madura’s existing shareholders in an all-cash deal. In the second stage, Madura will be merged into CreditAccess through a scheme of arrangement whereby Madura’s residual shareholders will receive shares of CAGL. The swap ratio for the second leg transaction will be decided later.

Boards of both the companies has approved the deal at their respective meetings held Wednesday. Madura’s promoter Tara Thiagarajan will act as an advisor to the board of CAGL after the merger.

The transaction is subject to the approval of Reserve Bank of India, the Securities and Exchange Board of India and other regulators.

“The acquisition will provide us with significant benefits in the form of better competitive positioning, larger business scale, deeper presence, portfolio diversification, optimum leverage and better profitability, while maintaining our quality of operations,” said Udaya Kumar Hebbar, managing director at CAGL.

“We both share a good cultural fit with our focus on customer centricity, rural markets and process driven approach,” he said.

CAGL has Rs 7905 crore outstanding loans at the end of September quarter while the 11th largest Madura has Rs 2053 crore. Madura has 11.1 lakh borrowers and 430 branches. The merger will help CAGL to have about 37 lakh borrowers and 1,300 plus branches spread across 13 states and 1 union territory.

Promoters of Madura were looking to exit for quite some time. Last year, Federal Bank had showed interest to acquire it.

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