Transactions are buzzing in the microfinance space. The one to recently conclude is the acquisition of Sachin Bansal-led Chaitanya India Fin Credit by Svatantra MicroFin Private Limited. Sized at around ₹1,000 crore, according to sources, this is one of the largest deals in the unlisted microfinance sector in recent years. The acquisition is awaiting regulatory approval from the Reserve Bank of India.
Svatantra MicroFin is promoted by Kumar Mangalam Birla’s daughter, Ananya Birla, who founded the company in 2012. The acquisition of Chaitanya is also the largest deal sealed by Svatantra so far since its inception and is the second acquisition since 2018, when it bought Micro Housing Finance for ₹300 crore.
Emails sent to Chaitanya India Fin Credit and Svatantra MicroFin remained unanswered until press time.
Bansal’s exit
About a year after the RBI turned down Chaitanya’s application for a universal bank license, Bansal started exploring exit options from the company. The MFI business didn’t fit his overall scheme of operations.
“Chaitanya is among the oldest MFIs and had the vintage that Bansal needed to seek a bank license. After the RBI declined its application, there weren’t many reasons for him to stay put with Chaitanya,” said a person aware of the matter. “MFI is a very specialised feet-on-the-street business and doesn’t compliment the kind of work done that Navi Finserv wants to pursue”.
Apparently, Bansal, who had grand plans in the financial services, is currently revamping Navi’s operations and business model. He set up Navi Technologies (now Navi Finserv) in 2018, within months after his exit from Flipkart. Chaitanya was acquired by Sachin Bansal in September 2019 from its co-founders, Anand Rao and Samit Shetty, for ₹739 crore.
Deal dynamics
At ₹1,000 crore of consideration, the valuation works out to about 1.3 times FY23 price to book value. This is at a slight discount to listed microfinance companies. The deal would help Svatantra cement its position as the second largest player among NBFC-MFIs, with combined assets under management of around ₹11,000 crore post-acquisition, based on FY23 financials.