Race intensifies for Madura Microfin

KOLKATA: Bids to buy Chennai based micro lender Madura Microfinance is intensifying with a US private equity fund matching first suitor Federal Bank’s offer, and the close race underlined the potential of the industry, two people close to the development said. They said Federal Bank was ready to pay Rupee720-750 crore to fully acquire the MFI with a loan portfolio of Rupee 1,184 crore.

Several private banks are acquiring MFIs fully or taking a strategic stake to expand their presence in rural areas. IndusInd Bank was the latest to buy out Bharat Financial Inclusion, the largest micro lender in India. The microfinance sector clawed back strongly from last year’s disruptions caused by demonetisation and Goods and Services Tax implementation, raising renewed investor interest.

Madura Microfinance was founded by late banker-turnedentrepreneur KM Thiagarajan and is now run by his non-resident Indian, neuro scientist daughter Tara Thiagarajan. Private equity firm Elevar Equity Mauritius is a key investor. The MFI has 250-plus rural and semiurban branch network in Tamil Nadu, Maharashtra, Karnataka, Kerala, Bihar and Odisha. It clocked a net profit of Rupee30 crore last year.


Tara Thiagarajan held 36.46 per cent in Madura at the end of March 2017 while total promoters’ holding was 46.08 per cent.

Sources said that Madura had a few other suitors including a mid-sized MFI.

However, only Federal Bank and the PE firm are in the race at present. Madura Chief Financial Officer M Narayanan did not respond to calls.