Microfinance: In one of the biggest deals in the microfinance industry, Ananya Birla’s microfinance platform rural women entrepreneurs Svatantra Microfin on Tuesday said it has entered into a definitive agreement to acquire Chaitanya India Fin Credit, the NBFC-MFI arm of a wholly owned subsidiary of Navi Group, which was co-founded by Flipkart co-founder Sachin Bansal. The transaction of Rs 1,479 crore is expected to be completed by the end of 2023, subject to receipt of regulatory approvals and customary closing adjustments.
“The proposed acquisition will propel Svatantra to a significant leadership position. The combined entity will command a substantial reach, enabling the delivery of a diverse array of financial services to our clients across a geographically diverse portfolio. We are committed to being a responsible lender, and I believe our synergistic strengths and shared ethos will accelerate our ongoing journey to create a unique, valuable and impactful financial services entity,” said Ananya Birla, Founder and Chairperson of Svatantra in a statement.
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The acquisition, once completed, is likely to transform Svatantra into the second-largest microfinance entity in India with a reach of more than 3.6 million active customers through 1,517 branches across 20 states and a combined AUM (assets under management) of Rs 12,409 crore as on March 31, 2023, the company said.
“We have seen Chaitanya grow almost 6X in the last 4 years, making credit accessible to rural India. This transaction is in line with our strategic plan to focus on our digital-first businesses, as we continue our digital-first financial services through the Navi Group. We believe that Svatantra is a good fit for Chaitanya and that the company will continue to grow and prosper with the combined expertise of both teams,” said Sachin Bansal, Chairman and CEO, Navi. JM Financial Limited acted as the financial advisor to Navi for this transaction.
Incorporated in 2012, Svatantra offers microcredit at affordable rates to rural women who are entrepreneurs themselves. It has served over 2.2 million rural customers across 19 states and has a compounded growth rate was 118 per cent for the FY15-23 period.
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On the other hand, Chaitanya, founded in 2009, was acquired by Bansal in October 2019 (along with its parent entity, now called Navi Finserv Limited) for about Rs 150 crore. It focuses on servicing rural India digitally with support from its parent company Navi and making credit accessible to all of rural India. Since the acquisition, the company said its business has seen a compounded growth rate of 77 per cent YoY, increasing its book size from about Rs 900 crore in March 2020 to over Rs 4,900 crore in March 31, 2023.
Chaitanya services 1.4 million customers across 12 states in India and had a net worth of Rs 721 crore as on March 31, 2023 which was shored up through a further capital raise of Rs 75 crore in June 2023. Chaitanya, currently A rated (CRISIL), has moved up 4 notches in its credit rating in less than 4 years.