Indian microfinance institution CreditAccess Grameen (CAGL) has signed definitive agreements to acquire local peer Madura Micro Finance (MMFL).
The deal will be carried out in two phases. In the first step, CAGL will purchase up to 76.2% stake in MMFL from its existing shareholders for cash. Subsequently, it will acquire the remaining stake through a share swap scheme.
Other financial details of the transaction were not disclosed.
As agreed, all MMFL employees will also migrate into CAGL upon merger.
The deal will further bolster CAGL’s position as a microfinance institution in India. The MMFL acquisition adds 1.1 million borrowers to CAGL books and 430 branches to its network.
Once complete, CAGL will boast a combined portfolio of INR99.58bn ($1.39bn), with 3.7 million borrowers. The combined microfinance institution will operate more than 1,300 branches across 13 states and one union territory in the country.
CreditAccess Grameen chairman Paolo Brichetti 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.”
Madura Micro Finance chairman and managing director Dr Tara Thiagarajan 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.”
MMFL will continue to operate as a separate business until the integration of business and processes is complete.
The completion of MMFL acquisition is subject to several regulatory approvals.