Adani Capital to increase small business lending over 2X in FY21; buys Essel Finance’s MSME loan arm

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Published: January 22, 2020 6:27 PM

Credit and Finance for MSMEs: Small business lender Adani Capital -- subsidiary of Adani Finserve and the NBFC arm of the Adani Group on Wednesday announced the “opportunistic” acquisition of Essel Finance’s MSME loan business.

The total lending book of NBFC and the housing finance business of Adani Capital as on December 31, 2010, stood at Rs 1,100 crore

Credit and Finance for MSMEs: Small business lender Adani Capital — subsidiary of Adani Finserve and the NBFC arm of the Adani Group on Wednesday announced the “opportunistic” acquisition of Essel Finance’s MSME loan business. This includes around Rs 154 crore of loan book having 1,100 customers along with 40 employees spread across 10 cities in India. Adani group had last year also inked a deal wherein its renewable energy arm Adani Green Energy had entered into an agreement to buy 205 MW of operating solar assets of the debt-ridden Essel Group at an enterprise value of Rs 1,300 crore.

“The acquisition complements our existing MSME business and helps us expand to new geographies including Noida and Chennai,” said Gaurav Gupta, CEO, Adani Finserve in a statement. The deal made sense for Adani as Essel Finance’s MSME loan arm also operated in secured lending, similar to the former, focusing on “income-generating borrowers. It is an opportunistic acquisition. Our near term focus is to focus on improvising processes, leveraging technology and enhancing productivity,” he added.

The total lending book of NBFC and the housing finance business as on December 31, 2010, stood at Rs 1,100 crore including Rs 150 crore share of the housing finance segment. The borrower profile across the two businesses include more than 18,000 entrepreneurs and homeowners. Its gross NPAs as on December 31, 2019, was Rs 2.4 crore.

Adani Capital is looking to expand beyond western India to central and east India focusing Madhya Pradesh, Chhattisgarh, and Orissa and is hoping to reach Rs 2,700-3,000 crore in the lending book by end of FY21 — more than doubling from current Rs 1,100 crore. Currently, Adani Capital is spread across Gujarat, Maharashtra, Rajasthan, and Karnataka while Adani Housing Finance has a presence in Gujarat, Maharashtra, and Rajasthan.

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Lack of credit continues to remain among the key challenges for micro and small businesses (MSEs). The growth in gross bank credit to MSEs remained contracted for November 2019 as well in the current financial year, data from the RBI showed. From minus 0.1 per cent in April, growth in credit deployment to MSEs has remained negative throughout FY20 till November during which the contraction was 0.9 per cent. The November bank credit stood at Rs 10.57 lakh crore — 6.2 per cent up from Rs 9.95 lakh crore November FY19. The amount for October FY20 was Rs 10.53 lakh crore, according to RBI’s January 2020 bulletin.

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