CreditAccess Asia generates total cash proceeds of € 25 million from the IPO of Equitas and a financial book gain of € 18.5 million since inception of its investment
Cash proceeds will be used to accelerate CreditAccess Asia’s growth plans via expansion of its product range and by tapping new geographical markets in Asia
(Amsterdam, 21 April 2016) – CreditAccess Asia NV (“CreditAccess”), an innovative operator of integrated credit institutions across Asia, offering loans and other financial products to self-employed, micro and small enterprises in India, Indonesia, and the Philippines, announces that it generated total cash proceeds of € 25 million by the sale of 50% of its shares in Equitas Holdings Pvt Ltd (“Equitas”), a participation of CreditAccess since early 2008. Equitas, one of the top small finance banks in India with a portfolio of around 2.4 million active clients, commenced its listing and first trading of its ordinary shares on the National Stock Exchange of India Ltd (“NSE”). The offering involved an increase in the company’s share capital and the placement of secondary shares. At the Offer price of INR 110 per share, Equitas has a market value of c.€ 490 million.
Since the start of Equitas’ operations in 2007, CreditAccess has been part of the controlling group of shareholders, holding c.13% of the shares (pre-IPO). At the end of FY15 (March 31), the book value of CreditAccess’ ownership interest in Equitas amounted to c.€ 35 million. The Equitas investment is a minority and no longer considered coherent with the CreditAccess’ strategy of being an operator of fully owned credit institutions. Hence, CreditAccess offered around 50% of its holding in Equitas in the IPO which resulted in a financial book gain of c.€ 18.5 million since the inception of its investment in 2008, of which c.€ 7.5 million will be accounted for in the P&L over FY17.
CreditAccess will use the cash proceeds to fund the expansion of the Company’s operations in existing markets and to set up operations in new geographies. The Company envisages that it will continue to hold the remaining part of its stake in Equitas, currently c.5% after dilution, gradually reducing it overtime, depending on market conditions and CreditAccess’ financial requirements.
Strategy of CreditAccess and Growth Potential of “Unbanked” Asia
Over half of the world’s unbanked population resides in Asia (World bank 2015). India and South East Asia have a population of around two billion people, characterized by a highly entrepreneurial spirit, a strong credit culture and, in many areas, low financial penetration of the banking system. They represent over 200 million households that are credit worthy and demand customized financial services supporting their businesses.
CreditAccess responds to this strategic opportunity by providing professional and customized financial services to local micro-entrepreneurs in the region, building on strong technological and process innovation. CreditAccess has developed an operational model based on the microfinance group-lending methodology in order to provide high quality financial services to this unbanked sector at low risk and with high levels of efficiency. Since its establishment in 2007, the Company has experienced strong growth in India, Indonesia and the Philippines.
CreditAccess currently has a total loan portfolio of around € 360 million with more than 1.6 million clients. The cash proceeds from the sale of (part of) its stake in Equitas will be used to fund the expansion of the Company’s operations in existing markets and to set up operations in new geographies within Asia. Over the next two years, CreditAccess aims to expand its operations into one to two new countries and expects to more than double its client base to over three million customers.