SHARE Microfin in Talks with Asmitha for Merger

Oct 2010
Mumbai, India, October, 06 2010 - Hyderabad-based micro finance institutions SHARE Microfin Ltd and Asmitha Microfin Ltd are in talks for a possible merger prior to the the former’s public issue.

The merger is aimed at boosting valuations, point out industry watchers and will make the combined entity the third largest player in the MFI space. Currently, SKS Microfinance, is the only listed MFI in the country and raised a little over Rs 1,600 crore through a public issue in July. It is also the largest micro finance player followed by Spandana.

Microfinance institutions (MFIs) lend small ticket loans to the less privileged, mainly in rural centres, who have no access to banking services. In an email response Kumar MD SHARE Microfin refused to comment on the merger with Asmitha Microfin Limited.

“SHARE Microfin and Asmitha Microfin is headed by the husband and wife duo. Share Microfin is headed by M Udaia Kumar and Asmitha is headed by Vidya Sravanthi his wife,’’ said a source in the know of the development. Share Microfin with 990 branches at the end of March had a loan portfolio of Rs8,945 crore. Its asset base at the end of March 2010 is Rs2,595 crore.

“The two MFIs are in talks for a possible merger prior to a public issue to boost valuations,’’ added the same source.

On Monday, the SKS board terminated the services of Suresh Gurumani, the company’s MD&CEO.``The removal of Suresh Gurumani by SKS Micro finance on account of differences of opinion with Vikram Akula the chairman and founder SKS is viewed negatively by the investor community. It is an event and could affect the future offerings planning to hit the market,’’ said a analyst who tracks the MFI industry.

The MFI industry is growing rapidly, according to the Bharat Microfinance Report, the total MFI channel outreach saw a 50.35% growth to 22.6 million clients in 2009 from 10 million clients in 2007. The total outstanding loan portfolio grew from Rs 3,456 crore in 2007 to Rs11,734 crore in 2009.


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