CreditAccess Grameen Limited (“CAGL”), India’s leading microfinance institution, has announced the signing of definitive agreements for acquisition of a controlling majority in Madura Micro Finance Limited (“MMFL”) and subsequently, a merger of MMFL into CAGL (“Transaction”). The Board of Directors of CAGL and the Board of Directors of MMFL at their respective meetings held today have approved the transaction.
CAGL will acquire 100% stake in MMFL in a two-step process. In the first leg, CAGL will acquire up to 76.2% stake in MMFL from its existing shareholders for cash and in the second stage, MMFL shall be merged into CAGL through a scheme of arrangement (“Scheme”). As part of the merger, the residual shareholders of MMFL will receive shares of CAGL at the share swap ratio proposed in the Scheme.
The transaction is subject to the approval of Reserve Bank of India, the Securities and Exchange Board of India / Stock Exchanges, National Company Law Tribunal and such other regulatory approvals as may be required.
The business acquired from MMFL will continue to operate as a separate division until the integration of business and processes is complete. All employees of MMFL will become employees of CAGL upon merger. MMFL’s Promoter, Tara Thiagarajan, will act as an Advisor to the Board of Directors of CAGL after the merger.
Paolo Brichetti, (Chairman, CreditAccess Grameen Limited) commenting on the announcement, said, “The acquisition underpins our mission to be the preferred business partner of low-income households lacking access to credit. It strengthens our microfinance franchise which can be leveraged to provide innovative financial services and products matching the evolving needs of under-served and unbanked households. We are also excited about building on MMFL’s industry leading technology and data analytics capabilities in the microfinance sector. We believe the acquisition will add value to our current and future stakeholders.”
Udaya Kumar Hebbar (Managing Director and CEO of CreditAccess Grameen Limited), commenting on the announcement said, “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. We both share a good cultural fit with our focus on customer centricity, rural markets and process driven approach. Both are professionally run businesses with strong governance standards. We welcome MMFL team to become a part of CAGL family.”
Tara Thiagarajan (Chairman and Managing Director of MMFL) commenting on the announcement said, “The acquisition represents an immense opportunity to build an even stronger operating platform and leverage innovations in technology, data and analytics for the benefit of low-income rural households. Both organizations share common values of transparency, operational efficiency and focus on the customer with significant synergies and a strong cultural fit. We are excited to become part of the CAGL family. ”
