Money & Banking

Fusion Microfin ‘actively looking at acquiring companies’

Shobha Roy Kolkata | Updated on July 29, 2019 Published on July 29, 2019

Devesh Sachdev, Founder and CEO, Fusion Microfinance

NBFC expecting 45-50% growth this fiscal: CEO

NBFC-MFI Fusion Microfinance is scouting for acquisitions to scale up its loan book and for diversifying into newer markets. The MFI, which is currently present in 18 States, is looking to add two to three more States in the north-eastern and southern parts of India by the end of this year.

According to Devesh Sachdev, Founder and CEO, Fusion Microfinance, a number of non-banking finance companies (NBFCs), particularly in the MFI space, are “struggling” due to the ongoing liquidity crisis following the IL&FS blowout. So, this would be an opportune time to scout for acquisitions.

“We are very actively looking at acquiring companies….we are looking at four or five companies (for acquisition). We know that there are certain companies that are struggling (to raise funds),” Sachdev told BusinessLine.

He, however, did not divulge any timeline for the proposed acquisition.

While the NBFC sector has been facing liquidity issues, Fusion is fairly insulated due to its rating and the scale of operations. The company is sitting on comfortable liquidity of around ₹500-600 crore, and also has sanctions to raise more funds.

Delhi-based Fusion recently raised close to ₹520 crore in a funding round led by Warburg Pincus LLC, marking the US private equity firm’s first investment in India’s microfinance sector.

Diversification

The acquisition would be primarily for getting a geographical advantage, adding a good team, or bringing better technology on board, he said. Scale (of disbursements) of the acquiring company would also be an important criterion for Fusion, which disburses close to ₹300 crore on a monthly basis.

“We would want some value that should accrue to us (from such acquisition) – it could be geographical advantage; we will look at acquiring a company where we are not present, or even if we are present where we do not have a significant portfolio,” he said.

Fusion, which is present in the north-eastern State of Assam, might look at foraying into Meghalaya and Tripura, among others. In the south, it is currently present in Tamil Nadu. It might look to add some more markets in South India.

Growth

The NBFC-MFI, which had grown its loan book by around 74 per cent in 2018-19, is expecting 45-50 per cent growth this fiscal. The growth would moderate to 35-40 per cent after 2020 due to the higher base effect, he said.

The company, which had assets under management (AUM) of ₹2,600 crore as on March 2019, is expecting to grow it to ₹3,600 crore by March 2020.

The NBFC-MFI sector, which grew by 40-42 per cent last year, has a huge scope for growth, given that a large number of people in India still lack access to finance.

“The MFI sector has touched five to six crore households; there are over 30 crore households in India and around 10-12 crore households need microfinance.

“So, I believe that the sector has the potential to grow to₹4-4.5-lakh crore from the current ₹2-lakh crore in the next six to eight years,” he pointed out.

Published on July 29, 2019
This article is closed for comments.
Please Email the Editor