IDFC Bank on Tuesday said it has signed a share purchase agreement to fully acquire Tiruchirappalli-based microfinance company Grama Vidiyal Micro Finance (GVMFL) in an all-cash deal, reports

fe Bureau in Mumbai. After the acquisition is complete, GVMFL will be a wholly-owned subsidiary of IDFC Bank and act as a dedicated business correspondent. The acquisition will also see all loan assets of GVMFL transferred to IDFC Bank.

According to Microfinance Institutions Network, GVMFL is India’s ninth largest microfinance company with a gross loan portfolio (GLP) of R1,502 crore at the end of FY16. If GVMFL is valued as per the GLP to market capitalisation of two listed peers — SKS Microfinance and

Ujjivan Financial Services — its current valuation should be between R1,787 crore and R1,937 crore.

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IDFC Bank buys Tamil Nadu microfin firm Grama Vidiyal 

Private sector lender IDFC Bank on Tuesday said it has signed a share purchase agreement to fully acquire Tiruchirappalli-based microfinance company Grama Vidiyal Micro Finance (GVMFL) for an undisclosed amount.

After completion of the acquisition, GVMFL will become a wholly owned subsidiary of IDFC Bank, and will act as one of its dedicated business correspondents. The acquisition will also see all loan assets of GVMFL being transferred to IDFC Bank.

Terming it a first-of-its-kind transaction where a bank has taken over a microfinance institution, Rajeev Lall, founder MD & CEO of IDFC Bank, said GVMFL’s 1.2 million existing customers will help the latter have more than 1.5 million by the end of FY17. “IDFC Bank intends to be a mass retail bank with a significant footprint and customer base in five years. For a young bank, however, it takes time to build its footprint. The acquisition of Grama Vidiyal not only fast-tracks building of a retail network, but with technology intervention, enables the bank to deliver new age banking solutions at scale,” he said.

According to the Microfinance Institutions Network, GVMFL is the ninth-largest microfinance company in the country with a gross loan portfolio (GLP) of Rs 1,502 crore at the end of FY16.

If GVMFL is valued as per the GLP to market capitalisation of two of its listed peers – SKS Microfinance and Ujjivan Financial Services – its current valuation should be anywhere between Rs 1,787 crore and Rs 1,937 crore. In comparison, IDFC Bank, which started operations in October 2015, has market capitalisation of close to Rs 18,000 crore.

IDFC shares up 8%

Shares of IDFC Bank on Tuesday soared over 8% after the company announced the acquisition of Grama Vidiyal Microfinance that will help it widen the reach. The stock climbed 8.42% to settle at Rs 52.15 on BSE.