Asirvad Microfinance plans to rope in partner; may go public in due course - Expert News
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Asirvad Microfinance plans to rope in partner; may go public in due course

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Manappuram Finance took over the Chennai-based company in February 2015 and at present has a 94.78% stake.

Asirvad Microfinance is considering options of bringing in a financial partner and going public in due course, a top official of the company said. However, its is not in a hurry given the current environment and is adequately capitalised at present to meet its growth, VP Nandakumar, chairman of Asirvad Microfinance, told FE.

Manappuram Finance took over the Chennai-based company in February 2015 and at present has a 94.78% stake.

“Manappuram Finance is very well capitalised today and we don’t have requirement for growth capital. But, our capital allocation policy formulated by the board stipulates that the incremental capital allocation for unsecured lending should not exceed 10% of the total allocation. This decision has been taken from a risk management perspective. It is in this context that we have considered raising fresh equity capital in Asirvad by bringing in a financial or strategic partner and listing on the stock exchange in due course,” Nandakumar said.

“The fact is that the microfinance business has very high growth potential and therefore a larger appetite for growth capital. Asirvad’s AUM has multiplied manifold since our acquisition in 2015,” he added. The microfinance company’s current capital adequacy is over 25% and its net worth exceeds Rs 1,000 crore.

Assets under management (AUM) grew 17 times in five years to touch Rs 5,500 crore by the end of FY20. In February 2015,when Manappuram had acquired the company, the AUM was around Rs 300 crore.

In FY21, the pandemic-induced slowdown impacted growth and there was a marginal erosion in AUM to Rs 5,357 crore as of Q3FY21.

“Our collection efficiencies improved significantly over the past few months, going above 100% of billings, as past dues are also getting collected. It had reached 99% in December 2020. However, with India now in the midst of a difficult second wave of the pandemic, we may have to wait before we can make an accurate assessment of where we stand,” Nandakumar said.

Regarding expansion, he said in line with risk management policy, the company has capped portfolio concentration at the state level to below 10% and at 1% for the district-level exposure. “Currently, Asirvad has more than 1,047 branches in 24 states. We are now present in most locations with business potential. We continue to add locations as and when warranted. Our focus is on achieving profitable, diversified and sustainable growth,” Nandakumar said.

The company reported a net profit of Rs 17.7 crore for the third quarter of FY21 as against a net profit of Rs 71.21 crore in the year-ago period.

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