MICROCAPITAL BRIEF: Indian Microfinance Institutions (MFIs) Share, Spandana Sphoorty, Asmitha Consider Merger, Continue Debt Restructuring Talks

As part of their ongoing efforts to manage significant losses in the state of Andhra Pradesh, Indian microfinance institutions (MFIs) Share Microfin Limited, Spandana Sphoorty Financial Limited and Asmitha Microfin Limited reportedly are in the early stages of considering the possibility of merging with one another. Padmaja Reddy, managing director of Spandana Sphoorty, has been quoted as saying that “It is a long process. We need to take approvals from the bankers and other investors before going in for the merger. We will focus on the merger aspect after the execution of the CDR [corporate debt restructuring] package by September 15” [1].

All three institutions are still negotiating the terms of a CDR proposal that was submitted to the Reserve Bank of India in June 2011, as was reported by MicroCapital at that time [2]. Share is looking to restructure INR 21.6 billion (USD 460 million) in loans, Spandana Sphoorty slightly less at INR 20 billion (USD 425 million), and Asmitha the least with INR 12.3 billion (USD 263 million) [1].

By Rohan Trivedi, Research Associate

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 Spandana Sphoorty Financial Limited:
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 Asmitha Microfin Limited:
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:

[1] Business Standard: “MFIs Asmitha, Share & Spandana may merge”, http://www.business-standard.com/india/news/mfis-asmitha-sharespandana-may-merge/445702/

[2] MicroCaptial.org story, June 17, 2011: “MICROCAPITAL BRIEF: Wholesale Lenders Agree to Restructure $1b in Debt for Indian Microfinance Institutions (MFIs) Spandana Sphoorty, Asmitha, Future, Share, Trident”, https://www.microcapital.org/microcapital-brief-wholesale-lenders-agree-to-restructure-1b-in-debt-for-indian-microfinance-institutions-mfis-spandana-sphoorty-asmitha-future-share-trident/

MicroCapital.org story, August 9, 2011: “MICROCAPITAL BRIEF: Industry Players Say Indian Microfinance Institutions Should Not be Crushed Even Though ‘Some MFIs Have Gone on the Wrong Path’”, https://www.microcapital.org/microcapital-brief-industry-players-say-indian-microfinance-institutions-should-not-be-crushed-even-though-“some-mfis-have-gone-on-the-wrong-path”/

MicroCapital.org story, June 6, 2011: “MICROCAPITAL BRIEF: Reserve Bank of India (RBI) Mandates Personal Guarantees from Promoters of Microfinance Institutions (MFI) Looking to Restructure Debt”, https://www.microcapital.org/microcapital-brief-reserve-bank-of-india-rbi-mandates-personal-guarantees-from-promoters-of-microfinance-institutions-mfi-looking-to-restructure-debt/

MicroCapital Universe Profile: Share Microfin Limited, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SHARE+Microfin+Limited

MicroCapital Universe Profile: Spandana Sphoorty Financial Limited, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Spandana+Sphoorty+Financial+Ltd

MicroCapital Universe Profile: Asmitha Microfin Limited, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Asmitha+Microfin+Limited

Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/

Similar Posts: