Three Indian microfinance institutions (MFIs), Spandana Sphoorty Financial, Share Microfin and Asmitha Microfin, have reportedly cancelled a potential merger on which MicroCapital had reported in August. The merger was expected to cut costs, following a drop off in repayments that began in the state of Andhra Pradesh in 2010. The need for the merger has apparently been mooted by the approval of a corporate debt restructuring (CDR) package for all three MFIs.
The CDR will allow the MFIs to convert part of their debt into optionally convertible, redeemable preference shares. Loans will also be restructured with interest rates of 12 percent, and a repayment period of seven to eight years. The lenders involved in the restructuring of wholesale loans to the MFIs have not all been named, but include India’s ICICI Bank Limited.
By Cameron Milani, Research Associate
About Spandana Sphoorty Financial: Spandana Sphoorty Financial Limited provides microcredit and “credit-plus” services to low-income households in India. The company was founded by Padmaja Reddy in 1998 and receives its funding from development finance institutions and banks. As of March 31, 2010, Spandana reported to the US-based nonprofit Microfinance Information Exchange (MIX) a gross loan portfolio of USD 779 million, return on assets (ROA) of 8.99 percent, return on equity (ROE) of 55.7 percent and approximately 3.66 million active borrowers.
About Share Microfin Limited: Share Microfin Limited is a microfinance institution (MFI) based in Hyderabad, India. After beginning operations in 1989 as a nonprofit, Share was converted into a non-bank financial institution (NBFI) in 2000. It offers loans—primarily to women—as well as training and consulting to microentrepreneurs. As of March 31, 2011, Share reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 553 million, a gross loan portfolio of USD 465 million, return on assets (ROA) of 0.33 percent, return on equity (ROE) of 2.4 percent and 2.84 million borrowers.
About Asmitha Microfin: Asmitha Microfin Limited is a microfinance institution (MFI) based in Hyderabad, India. It offers collateral-free group and individual loans to women. Registered as a public limited company, Asmitha was founded in 2002 and operates primarily in rural areas. According to the US-based nonprofit Microfinance Information Exchange (MIX) Asmitha reported total assets of USD 321 million, a gross loan portfolio of USD 298 million, return on assets (ROA) of 1.3 percent, return on equity (ROE) of 10 percent and 1.34 million active borrowers as of March 31, 2011.
Sources and Additional Resources:
The Economic Times, “3 MFIs Spandan Sphoorty Financial, Share Microfin and Asmitha Microfin Decide Against Merger,” http://articles.economictimes.indiatimes.com/2011-10-25/news/30320369_1_merger-proposal-debt-restructuring-share-microfin
MicroCapital Article, October 18, 2011: “MICROCAPITAL BRIEF: Banks Approve $245m Loan Restructuring for Indian Microfinance Institution Share Microfin,” https://www.microcapital.org/microcapital-brief-banks-approve-245m-loan-r…
MicroCapital Article, August 17, 2011: “MICROCAPITAL BRIEF: Indian Microfinance Institutions (MFIs) Share, Spandana Sphoorty, Asmitha Consider Merger, Continue Debt Restructuring Talks,” https://www.microcapital.org/microcapital-brief-indian-microfinance-institution-bandhan-financial-services-raises-29m-in-equity-from-international-finance-corporation-ifc-arranged-by-intellecap-2/
MicroCapital Universe, Spandana Sphoorty Financial: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Spa…
MicroCapital Universe, Share Microfin Limited: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SHA…
MicroCapital Universe, Asmitha Microfin Limited: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Asm…
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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