CreditAccess Grameen August 2023 NCD Public Issue Review

CreditAccess Grameen Limited has launched its public issue of NCDs to mobilise funds from the debt market. Read further to know more about the business of CreditAccess Grameen Limited.

Specified terms of the NCD’s are as follows:

About the CreditAccess Grameen Limited

Previously known as Grameen Koota Financial Service Limited, CreditAccess Grameen Limited (“CAGL”) was incorporated in 1991. CAGL is registered as a NBFC-MFI and CAI the parent company is registered in Amsterdam, Netherlands. The company is primarily engaged in lending in rural areas to women for income generation. CreditAccess offers a range of products and services, spanning varied asset classes and diversified consumer segments. The businesses of CreditAccess are organized around five broad lines –Microfinance, loan against property including affordable home loan, vehicle loan, gold loan, and Life insurance. It is also an aggregator for the National Pension Scheme.

About the Group

CAI is a professionally managed company invested in by 220+ shareholders. Among them: Olympus Capital Asia (US PE firm, focusing on mid-cap Asian companies) holding 15% and Asian Development Bank holding 9% are the largest shareholders. The initial shareholders are a large group of family offices and HNIs still represent around 50% of the share capital.

CAGL is a listed company on the Indian Stock Exchange. CAGL is promoted by CAI which currently holds 66.77% as of June 2023.

Over the years, CAGL has established its presence in the micro finance industry and has emerged as the leading MFI lender in terms of portfolio size and market share. CAGL currently serves 4.4+ million clients with 17,000+ employees operating through 1,800+ branches in India. The total income of the company amounted to ₹ 3,545.12 crs for the year ended March 31, 2023, and ₹ 2,742.82 crs for the year ended March 31, 2022, on a consolidated basis. The company earned profit of ₹ 826.06 crs for the year ended March 31, 2023, and ₹ 353.07 crs for the year ended March 31, 2022, on a consolidated basis.

History of CreditAccess Grameen Ltd

CreditAccess Grameen Limited was originally incorporated as a Private Limited Company under the name Sanni Collection Private Limited (SCPL) on June 12, 1991, at Calcutta, West Bengal. In February 2007, the entire shareholding of SCPL was acquired by Vinatha M. Reddy, Vijitha Subbaiah and Suresh K. Krishna, in their respective individual capacity. Subsequently, in October 2007, the microfinance business being operated under T. Muniswamappa Trust (TMT), a public charitable trust engaged in the business of providing micro loans in Karnataka was transferred to SCPL. The microfinance business being operated under TMT was established as a program under the name Grameen Koota in 1999.

The Company was granted NBFC-Microfinance Institution (NBFC-MFI) status by the RBI with effect from September 5, 2013. Subsequently, the name of the Company was changed to Grameen Koota Financial Services Private Limited on November 13, 2014. In 2014, CreditAccess Asia N.V. acquired a majority stake in the company.

The Company was converted into a Public Limited Company on November 27, 2017, and the name of the Company was changed to Grameen Koota Financial Services Limited on December 18, 2017. Pursuant to Resolution passed by Shareholders, name of the Company was changed to CreditAccess Grameen Limited on January 12, 2018.

CreditAccess Grameen came out with an initial public offer (IPO) during the period from 8 August 2018 to 10 August 2018. The IPO was a combination of fresh issue of Rs 630 crore and an offer for sale of 1.18 crore equity shares from promoter CreditAccess Asia N.V. The IPO was priced at Rs 422 per share. The stock made its debut on the stock exchange on 23 August 2018. 

The Company acquired 75.64% of the shareholding of Madura Micro Finance Limited (MMFL) on March 18, 2020, and additionally acquired 0.44% of the share capital of MMFL on March 31, 2020. The order from NCLT approving the merger of MMFL and CAGL came in February 2023.

Financial Performance (at consolidated level)

* PAT margin = PAT / Revenue from operation.

**The company reported lower profitability in FY21 due to COVID-19. Since then, the company has been steadily improving its profitability.

CRAR of NBFCs in the group

* By the end of FY 2023, MMFL merged with CAGL

Borrowings

Top 10 NCD holders as on June 30, 2023:

Nature of Borrowings

Type of Borrowings

Peer Comparison* (FY 2023)

*Consolidated

Credit Rating History

Conclusion

Comforts:

• Largest NBFC-MFI with an established track record.
• Consistently and steadily growing profitability post COVID.
• Healthy capitalization and comfortable gearing levels.
• Experienced management.
• Comfortable asset quality with GNPAs at 1.21% and NNPA at 0.42% as of March 2023

Concerns:

• High regional concentration in operations.
• Inherently modest credit profile of the borrower.
• Susceptibility of asset quality to local socio-political issues remain high.