Northern Arc Capital, a diversified non-bank financial company (NBFC) focused on underserved people and companies, stated on Thursday that it has entered into a slump sale agreement to acquire Chennai-based SMILE Microfinance Limited.
The agreement will result in the acquisition of SMILE's microfinance portfolio, as well as its large network of approximately 150 branches serving more than two lakh consumers. Around 850 SMILE workers will join the Northern Arc group upon the transaction's completion, the company's IPO-bound Northern Arc Capital stated in a news statement.
According to its website, SMILE provides microloans to women from economically disadvantaged areas of urban and rural Tamil Nadu.
According to Northern Arc Capital, the acquisition is subject to the fulfillment of a standard set of conditions associated with such transactions. However, the transaction's value was not disclosed.
Rural penetration is a priority.
"We look forward to the SMILE team joining the Northern Arc group. The purchase is a significant step in achieving our strategic objectives. SMILE is a pioneer in the microfinance market in south India, and we want to use their rural penetration and long-standing customer connections to rapidly develop this company," Northern Arc's MD and CEO Kshama Fernandes was cited as saying in the statement.
The firm stated that the purchase will enable the Northern Arc group accelerate its entry into the rural finance industry, where it intends to target the next billion customers by delivering small ticket loans via a digital platform.
"The Northern Arc group's mission is to provide small ticket loans to underserved rural and semi-urban parts of the country using an efficient, flexible, and scalable digital platform. We intend to use the reach and skills of SMILE's MFI business in order to establish a portfolio of high-quality, high-growth loans," said Jagadish Babu Ramadugu, MD and CEO of Northern Arc's Retail Rural Finance subsidiary.