After raising $4.5 million (Rs 25.08 crore) from Accion and Pragati India fund, microfinance company Saija Finance Ltd is looking to expand its business and product portfolio through acquisitions.
In June, Accion has put in about $2.2 million (Rs 12.26 crore) into Saija and Pragati invested about $2.3 million (Rs 12.82 crore). Their combined holding in Saija would be about 74.9 per cent. In the first round of funding in 2009, the MFI had received Rs 2.5 crore as capital from Accion.
Accion, a global non-profit entity working in the microfinance sector, had picked up 49 per cent stake then. Pragati is an India-focused private equity fund investing in small and medium-sized companies. Saija was set up in 2008 by Shashi Ranjan Sinha, a financial sector professional, and his wife Rashmi Sinha, a human resource expert. The microfinance institution (MFI) operates in five districts of Bihar through seven branches.
S R Sinha, Saija’s chairman and managing director, said with fresh capital in the kitty, four years of experience of running unit and 110 people on the rolls, the MFI will grow in a sustainable manner. Inorganic growth (mergers and acquisitions) is one of the option Saija is considering to expand.
MFI activity has become a volume game with restrictions on margins, especially after the Reserve Bank of India prescribed norms for better regulation.
Elaborating on the M&A strategy, Sinha said some of the MFIs have good client base but lack capital base. Saija has received some proposals (for acquisitions), he said, but did not elaborate.
The inorganic growth would not be in areas where Saija has a presence. The expansion would be in districts bordering Uttar Pradesh and Jharkhand, Sinha said.
The company expects to close the current financial year with a loan book of Rs 35 crore. It would go in for another round of capital infusion six months later, to be able to support an asset book of Rs 100 crore by March 2013 and Rs 500 crore by March 2015.
