Ananya Birla's Svatantra MFI to acquire Chaitanya India Fin for Rs 1,479 cr

Combined entity to become 2nd-largest MFI player

Ananya Birla’s Svatantra Microfin will acquire Sachin Bansal-controlled Chaitanya India Fin Credit Private Ltd in a deal valued at Rs 1,479 crore.

This transaction, one of the largest in the sector, is expected to catapult Svatantra to become the second-largest player among non-banking financial company-microfinance institutions (NBFC-MFIs) in the country with combined assets under management (AUM) of Rs 12,409 crore. Creditaccess Grameen is the largest player with AUM of Rs 21,031 crore at the end of March 2023.

Svatantra has entered into a definitive agreement to acquire Chaitanya, a wholly owned subsidiary of Navi Group. The transaction is expected to be completed by the end of 2023, subject to the receipt of regulatory approvals and customary closing adjustments, Svatantra said in a statement.

JM Financial acted as the exclusive financial adviser to Navi for this transaction.

Ananya Birla, founder and chairperson of Svatantra, is the daughter of billionaire industrialist Kumar Mangalam Birla, while Bansal, co-founder of Flipkart, is currently the chief executive officer of Navi Group.

The proposed acquisition will transform the microfinance landscape, with Svatantra’s more than 3.6 million active customers through 1,517 branches across 20 states. 

The proposed acquisition, Ananya Birla said, would propel Svatantra to a significant leadership position. The combined entity will command a substantial reach, enabling the delivery of a diverse array of financial services to clients across a geographically diverse portfolio.

Chaitanya has grown almost sixfold in the last four years, making credit accessible to rural India. “This transaction is in line with our strategic plan to focus on our digital-first businesses, as we continue our digital-first financial services through Navi Group,” said Bansal.

Alok Misra, director of the Micro Finance Institution Network (MFIN), said the acquisition was synergistic as it gives Svatantra strategic outreach in South India. From the sector’s viewpoint, while Svatantra is known for its efficient operations and responsible lending, a higher size will further strengthen it and also contribute to higher efficiency through economies of scale.

The gross loan portfolio (GLP) of NBFC-MFIs rose by 38.7 per cent year-on-year to Rs 1.31 trillion at the end of March 2023, from Rs 94,570 crore at the end of March 2022, according to MFIN.