Creditaccess Grameen Ltd. · NSE:CREDITACC
Creditaccess Grameen — Merger or Acquisition (November 2019)
28 slides from Creditaccess Grameen's merger presentation, November 2019
Slide 1: CreditAccess Grameen and Madura Micro Finance Transaction Overview
CreditAccess Grameen and Madura Micro Finance Transaction Overview November 2019 www.grameenkoota.org 1
Slide 2: Disclaimer
Disclaimer By accessing this presentation, you agree to be bound by the following terms and conditions. This presentation (which may reflect some price sensitive information in terms of SEBI regulations and Companies Act, 2013, as amended from time to time) has been prepared by CreditAccess Grameen
Slide 3: Discussion Summary
Discussion Summary ➢ Transaction Overview ➢ Introduction to Madura Micro Finance Ltd. ➢ Transaction Rationale ➢ Proforma Metrics Note: The financials of Madura Micro Finance Ltd are based on I-GAAP standards www.grameenkoota.org 3
Slide 4: Transaction Overview
Transaction Overview Key Highlights Comments • Established in 2006, MMFL is a leading rural focused NBFC-MFI headquartered in Chennai. Key metrics as of Sep-19: Overview of Madura Micro Finance Ltd. o Borrowers: 11.1 Lakh, GLP: Rs 2,053 Cr, Net Worth: Rs 368 Cr, H1 FY20 annualised PAT: Rs 95 Cr (“MM
Slide 5: Transaction Overview
Transaction Overview Key Highlights Comments • Reserve Bank of India (RBI) Regulatory Approvals • Securities and Exchange Board of India / Stock exchanges (NSE and BSE) Required • National Company Law Tribunal (NCLT) • For both CAGL and MMFL: Lenders, Debenture Holders / Trustees, Trustee and Calcul
Slide 6: Key Transaction Steps
Key Transaction Steps Transaction To Be Undertaken Through a 2 Step Process: Step 2: Swap the Residual Shareholders into CAGL Step 1: Acquisition of ~ 76.2% Stake in MMFL and Merger of MMFL into CAGL Swapped into CAGL MMFL Residual shareholders (Promoter, MMFL CAGL CAGL Employee trust, key CAGL Resi
Slide 7: Indicative Transaction Timeline
Indicative Transaction Timeline Acquisition of Majority Completion of Merger Process: Announcement: 27 Nov 2019 Stake: Expected by Mar-20 Expected Before Nov-20 Upto ~ 4 months Upto ~ 6-7 months ~ 1 month Regulatory Filings Board Approval (Within ~ 1 week from Board NCLT Filings & Approvals ROC Fili
Slide 8: Discussion Summary
Discussion Summary ➢ Transaction Overview ➢ Introduction to Madura Micro Finance Ltd. ➢ Transaction Rationale ➢ Proforma Metrics www.grameenkoota.org 8
Slide 9: MMFL: Overview (1)
MMFL: Overview (1) Background Footprint • MMFL was started by erstwhile promoters of Bank of Madura Denotes market GLP • Bank of Madura started micro-lending in 1995 and merged with ICICI bank entry year (FY) Rs 2,053 Cr in 2001 • Post merger, the micro-lending business continued in a partnership mo
Slide 10: MMFL: Overview (2)
MMFL: Overview (2) Product Portfolio Typical Ticket Tenor Disbursement Rate of Product Type Size (Rs.) (Months) Mix (FY19) Interest Entry Level loan (ELL): First cycle loans 33,000 22 / 24 / 30 66% Group loans (10-20 members) Activity Term Loan (ATL) - 6 levels: Repeat loans 40,000 – 65,000 24 / 30
Slide 11: Discussion Summary
Discussion Summary ➢ Transaction Overview ➢ Introduction to Madura Micro Finance Ltd. ➢ Transaction Rationale ➢ Proforma Metrics www.grameenkoota.org 11
Slide 12: Rationale For Merger
Rationale For Merger Access To Large Client Base Significant Synergies And Helps Achieve Expected From Both CAGL Geographic Diversification And MMFL Platforms 01 04 Strengthens CAGL’s Cultural Fit, Leadership And Competitive 02 05 Professionally Managed, Positioning Well-aligned Thought Process 03 0
Slide 13: 1. Access to Large Client Base and Helps Achieve Geographic Diversification
1. Access to Large Client Base and Helps Achieve Geographic Diversification 1 Access to a borrower base of 11.1 Lakh with very limited overlap (only ~ 0.5 * Lakh) in borrower base 2 Positions CAGL as a market leader in TN with a portfolio of ~ Rs 2,300 Cr (2.6x current portfolio) 3 Helps in portfoli
Slide 14: 1. Access to Large Client Base and Helps Achieve Geographic Diversification
1. Access to Large Client Base and Helps Achieve Geographic Diversification Strengthens Presence And Distribution In Existing Markets And Provides Access To Newer Markets Pan India Presence - 13 States / 1 UT • Provides access to a borrower base of ~ 11.1 Lakh (overlap of only ~0.5 lakh) • Positions
Slide 15: 2. Opportunity To Acquire A High Quality Platform Well Poised For Growth And Scale
2. Opportunity To Acquire A High Quality Platform Well Poised For Growth And Scale 1 MMFL is the 11th largest NBFC-MFI * in India with GLP of Rs 2,053 Cr & 11.1 Lakh borrowers (Sep-19) 2 Consistent track record of demonstrating high degree of profitability (Avg. FY16 – H1 FY20: ROE ~ 23.3%) 3 Demons
Slide 16: 2. Opportunity To Acquire A High Quality Platform Well Poised For Growth And Scale
2. Opportunity To Acquire A High Quality Platform Well Poised For Growth And Scale Consistent History Of Delivering Quality Growth Superior Income Profile GLP in Rs Cr Total Income / GLP 2,053 Avg.: 14.4% 1,860 15.3% 15.0% 14.5% 13.8% 13.6% 1,184 823 553 369 230 FY14 FY15 FY16 FY17 FY18 FY19 H1 FY20
Slide 17: 3. Accelerates CAGL's Growth And Helps Achieve Leverage
3. Accelerates CAGL’s Growth And Helps Achieve Leverage Transaction adds ~ 1 year of organic growth (Branches / Borrowers) - ~ 48% / 40% increase in H1 FY20 metrics 1 from MMFL acquisition Strengthens leadership position wrt. Competition (Proforma GLP 48% higher (H1 FY20) than the closest 2 competit
Slide 18: 3. Accelerates CAGL's Growth And Helps Achieve Leverage
3. Accelerates CAGL’s Growth And Helps Achieve Leverage Accelerates the Growth Story and Adds ~ 1 Year of Growth Positions CAGL Favourably w.r.t Competition Borrowers GLP Rs Cr As on Sep-19 9,958 1,109 7,905 6,723 5,407 4,747 4,724 4,620 3,699* 2,640 40.1% CAGL CAGL + Satin Spandana Muthoot Asirvad
Slide 19: 4. Significant Synergies Between the CAGL and MMFL Platforms
4. Significant Synergies Between the CAGL and MMFL Platforms Increase in wallet share per MMFL’s borrower driven by higher borrower retention through CAGL’s customer 1 centric approach and multi product strategy Cost of Borrowing (COB): Potential to reduce COB by ~ 1.3% for MMFL over the medium term
Slide 20: 4. Significant Synergies Between the CAGL and MMFL Platforms
4. Significant Synergies Between the CAGL and MMFL Platforms CAGL Can Benefit From Driving Higher Revenue / Borrower in MMFL MMFL Can Benefit From Lower Cost of Borrowings As on Sep-19 As on Sep-19 GLP / Borrower COB 11.6% 29,943 10.3% 1.3% 18,505 CAGL MMFL CAGL Madura Focus on driving higher wallet
Slide 21: 5. Cultural Fit, Professionally Managed, Well-Aligned Thought Process
5. Cultural Fit, Professionally Managed, Well-Aligned Thought Process Cultural fit: Both organisations share common ethos of customer centricity, rural focus, employee first culture and 1 a process driven approach. MMFL is a ‘Great Place to Work ‘ certified organization. Management familiarity and a
Slide 22: 5. MMFL's Experienced Management Team With Aligned Mindset
5. MMFL’s Experienced Management Team With Aligned Mindset Tara Thiagarajan Mohan Eddy M Narayanan Chairman, MD & Promoter Whole-time Director and Key Management Chief Executive Officer ❖ Tara is a scientist with a background spanning ❖ Responsible for People, Process and Data Excellence ❖ Responsib
Slide 23: 6. Leverage MMFL's Strengths in Technology Integration
6. Leverage MMFL’s Strengths in Technology Integration MMFL is at the forefront in technology integration across various facets of the business: CAGL can integrate best 1 practices into the combined entity 2 Gain access to MMFL’s Intellectual Property for enhanced data analytics and process excellen
Slide 24: 6. MMFL At The Forefront Of Technology Integration
6. MMFL At The Forefront Of Technology Integration CAGL Can Leverage MMFL’s Strengths In Technology Key Aspect Overview Impact • Real-time information visibility for Technology in • Android mobile applications (with offline capability) for sourcing, effective risk monitoring and control and Operatio
Slide 25: Discussion Summary
Discussion Summary ➢ Transaction Overview ➢ Introduction to Madura Micro Finance Ltd. ➢ Transaction Rationale ➢ Proforma Metrics www.grameenkoota.org 25
Slide 26: Proforma Metrics: Scale and Footprint (H1 FY20)
Proforma Metrics: Scale and Footprint (H1 FY20) As on Sep-19 Gross Loan Portfolio (GLP) (Rs Cr) Disbursement (Rs Cr) Borrowers (‘000) 9,958 3,118 3,699 * 7,905 2,186 26.0% 42.6% 2,640 40.1% 1,109 2,053 932 CAGL MMFL CAGL + MMFL CAGL MMFL CAGL + MMFL CAGL MMFL CAGL + MMFL * Based on ~ 0.5 Lakh common
Slide 27: Proforma Metrics: Financials and Asset quality (H1 FY20)
Proforma Metrics: Financials and Asset quality (H1 FY20) As on Sep-19 Opex / GLP Ratio (%) Asset Quality (%) PAT (Rs Cr) 5.2% * Higher due to impact of 2.5% 244 5.1% 5.1% Gaja (cyclone). Excl. Gaja portfolio, PAR 60 / 90 197 was ~ 1.2% / 0.7% 0.9% 0.5% 47 CAGL MMFL CAGL + MMFL CAGL NPA MMFL CAGL + M
Slide 28: Thank You
Thank You For any investor related queries , please mail to investorrelations@grameenkoota.org
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