The acquisition enables Purple Finance to instantly tap into 147 branches, over 31,000 microfinance centres and 1.63 lakh customers across 74 districts in 10 states, working towards achieving its small finance bank ambition
Non-banking financial company Purple Finance has announced plans to acquire Saksham Gram Credit Private Ltd in a share swap transaction. The company, after successfully raising commitments to the tune of ₹ 108 crore in equity funds, announced that it was preparing to enter the rural markets for its lending activities by acquiring Saksham. The acquisition is still dependent on the outcome of due diligence and all the requisite approvals.
What Saksham Gram Credit Brings
Saksham Gram Credit is an established rural lending business, which offers both microfinance products and secured and unsecured business loans to customers across rural and semi-urban areas in India. The rural lender has 147 branches and over 31,000 microfinance centres in 74 districts spread across 10 states with more than 1.63 lakh customers and a headcount of almost 900 people. The company has a presence spread across southern India which is well in tune with Purple Finance’s focus areas on Tier III and IV cities for future growth.
The Combined Entity
On completion of the transaction, the combined entity is expected to have Assets Under Management (AUM) of around ₹850 crore. Purple Finance will not only get a customer base in rural India immediately but also gain a distribution network that would otherwise take many years to develop organically.
The Strategic Direction
“This deal will significantly bolster our capabilities, extend our geographical reach and deepen our portfolio, achieving objectives that organic growth alone may not be able to deliver in the timeframes that this business requires,” said Amitabh Chaturvedi, chairman, Purple Finance. The move is in line with the company’s long-term strategy, which is to go beyond mere branch expansion.
The acquisition also supports Purple Finance’s ambition to eventually become a small finance bank – a key aspect for which would be having a diverse lending portfolio and a significant presence in rural and semi-urban regions. A share-swap will keep cash outflow for Purple Finance under control and will ensure that the shareholders of Saksham Gram Credit gain a stake in the combined entity.
