Essel Finance eyes M&As in microfinance, MF space

Essel Finance, a leading private sector financial services company from the Essel Group, is aggressively pursuing inorganic growth opportunities to expand its business. The company has identified four areas for diversification, and hopes to add three of those businesses to its portfolio through acquisitions next year. Speaking with dna, Amitabh Chaturvedi, managing director, Essel Finance Management LLP, said the company is pursuing acquisitions as a strategy predominantly to achieve its business diversification plans. "Four areas have been zeroed in on for diversification in the coming year. Of this, three businesses such as mutual fund, microfinance and digital payments will be added through acquisitions. In fact, we are actively talking to one MFI and if the pricing works well we could be acquiring a microfinance company soon," said Chaturvedi.

The fourth business will be a housing finance company, which will be done organically. Essel Finance is in the process of applying to the National Housing Board (NHB) for a licence and hope to get it soon. "We are hoping to get the licence by February or March next year, post which a new housing finance company will be launched," he said.

The company management has not earmarked a specific sum for making the three acquisitions as it believes being part of the cash-rich Essel Group funding will not be an issue. "Funding will not be an issue, hence we have not put a number in terms of funds to be made available for doing the acquisitions. The mandate is to set up the three business verticals and present a business plan. If the promoters like the proposals – be it Rs 50 crore or Rs 100 crore – we will go ahead with the acquisition," said Chaturvedi.

Elaborating on the company's approach to doing the acquisitions, he said the management is clear it will not be done just for a licence. "I will do an acquisition only if the companies have a particular size, network and customer base," said Chaturvedi, adding that capital will then be infused into those businesses to take them to the next level of growth. On the need for getting into digital payments business, Chaturvedi said that being a financial services player, the company needs to be part of the digital payment ecosystem, be it through card, ATM network or e-wallet offering. "We had made a formal application to the Reserve Bank of India (RBI) for setting up 50,000 white-label ATMs across India. However, we were told that the window for new licensing is closed already and the present rule does not permit existing licence holders to sell their company," he said.

"I have been promised that the window may be opened towards the end of this calendar year and we are very keen to be set up an ATM network, which will be one of the offerings from our digital payments business vertical," he said.