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The QIP is likely to be launched as early as this week.
The QIP is likely to be launched as early as this week.

CreditAccess looks to raise 1,000 crore

The firm requires the additional funds to augment its long-term resources for meeting funding requirements

CreditAccess Grameen Ltd, a non-banking financial company (NBFC), plans to raise up to 1,000 crore this month by selling shares to financial institutions, said two people aware of the development.

CreditAccess Grameen, is one of the largest microfinance institutions in the country. Headquartered in Bengaluru, it is focused on providing micro-loans to women predominantly in rural areas across India. It operates in 13 states, including Karnataka, Maharashtra, Tamil Nadu, Chhattisgarh and Madhya Pradesh.

“Last month, the company’s shareholders cleared the proposal to issue fresh shares to enable the company to raise up to 1,000 crore in fresh funds. The qualified institutional placement (QIP) is likely to be launched as early as this week," said one of the two persons mentioned above, both of whom spoke on condition of anonymity. Investment bank ICICI Securities is advising CreditAccess Grameen on the QIP, the other person said. “The NBFC has a resolution for raising 1,000 crore and it plans to raise the entire amount in one go," he said.

The company requires the additional funds to augment its long-term resources for meeting funding requirements for its business activities and general corporate purposes according to its growth strategy and to improve the capital adequacy ratio as laid down by the Reserve Bank of India, the lender said in a recent stock exchange filing.

CreditAccess Grameen and ICICI Securities chose not to comment on the development.

The micro lender has seen steady improvement in collections since the country began easing lockdown restrictions.

From June to September, its collections have improved from 74% to 88%, the lender said in a recent investor presentation. As of September, around 77% of its customers were making 100% payments, while only 8% of the customers made no payments.

At the end of June quarter, CreditAccess Grameen’s gross loan portfolio stood at 11,724 crore, with 4 million active borrowers and a branch network of 1,388 locations.

The Indian capital markets have seen a lot of fundraising by lenders, both banks and NBFCs, in the last few months. These lending institutions have raised capital to bolster their balance sheets against the impact of the covid and to take advantage of the opportunities that may arise out of the pandemic.

Large private sector banks such as ICICI Bank, Axis Bank, and Kotak Mahindra Bank have raised a lot of capital through QIPs. ICICI Bank raised around 15,000 crore, Axis raised 10,000 crore, and Kotak raised 7,442 crore.

Many non-bank lenders also tapped the markets to raise funds, either through a rights issue or a QIP. Mortgage financier Housing Development Finance Corp. raised around 14,000 crore through a QIP in August. Mahindra Finance raised 3,089 crore through a rights issue, while Shriram Transport Finance Co. Ltd raised 1,500 crore.

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