IIFL Finance is exploring options to exit its microfinance subsidiary IIFL Samasta Finance, and has started discussions with multiple interested parties. According to reports from The Economic Times, Piramal Finance is one of the interested parties and negotiations with it have progressed a bit, with discussions at a preliminary stage. The discussions are part of IIFL Finance's long-term plan to bring in new investors to the microfinance subsidiary, with the thought process starting in 2023 while the plan was put on hold as the sector turned volatile following severe asset quality stress. As reported by The Economic Times, with greenshoots seen in the horizon, the IIFL group has renewed the plan, and if entities like Piramal Finance come into the fray, then a 100% exit is very much possible.
IIFL Samasta had ₹9,681 crore assets under management at the end of December last year, as reported by The Economic Times. The AUM contracted 16% year-on-year as the lender went slow on new business expansion to ward off fresh stress. In the first nine months of the fiscal year, the microfinance company made ₹39 crore net loss. The Bengaluru-headquartered microfinance company was established in 2008 and IIFL acquired it in 2017. It serves 2.3 million customers through 1,590 branches across the country.
As reported by The Economic Times, with greenshoots seen in the horizon, the IIFL group has renewed the plan for bringing in new investors. If entities like Piramal Finance come into the fray, then a 100% exit is very much possible, according to sources cited in the report. IIFL Finance stated that it and its subsidiaries, including IIFL Samasta, continuously evaluate various strategic opportunities in the ordinary course of business, including potential partnerships, capital raises, restructurings, and portfolio actions, with a view to enhancing long-term shareholder value and strengthening the franchise.
Piramal Finance, however, denied having talks with the company in a stock exchange notice, as reported by The Economic Times. IIFL Finance responded to queries about the possible exit of the microfinance business, stating that it and its subsidiaries continuously evaluate various strategic opportunities in the ordinary course of business, including potential partnerships, capital raises, restructurings, and portfolio actions, with a view to enhancing long-term shareholder value and strengthening the franchise.
