New Delhi: Microlender Spandana Sphoorthy is looking to expand its balance sheet and exploring growth opportunities for its subsidiary Criss Financial, as part of Vision 2028, unveiled recently.
Managing director and chief executive Shalabh Saxena, in an interview, said under the Spandana 2.0 plan the NBFC-MFI seeks to acquire a non-banking financial company to enhance its loan against property and small business portfolios through Criss Financial.
Saxena refuted all rumors about the sale of Spandana to Yes Bank. He said its promoter Kedaara Capital with over 48% stake, has extended the fund life of its initial fund until September 2024, and will take a decision on whether to stay invested only after that.
“Vision 2028 has two parts. We will grow the microfinance business organically. But are also open to looking at options for growing the LAP and nano enterprise loan book through inorganic route,” said Saxena. “We will be looking at acquiring an NBFC. But currently we are in talks with none.”
In terms of organic growth, Saxena said it aims to increase assets under management to ₹28,000 crore by FY28 from ₹10,000 crore currently. It has set a target of ₹15,000 crore by FY25 and, subsequently, grow at 20% every year.
Besides, Spandana also aims to grow its loan against property and small business loan portfolios under Criss Financial to ₹3500 crore by FY28. Vision 2028 was released by the company on Monday.
“As per Vision 2025, we will hit the microfinance business at ₹15,000 crore end of next year, another ₹2,000 crore will be non microfinance business. From there, we will be coming out with the theme of 28 by 28, which is ₹28,000 crore by FY28. Of this, microfinance will be about ₹24,000 crore and ₹3,500 crore will be the non microfinance business.”
Vision 2025 was envisioned after Saxena assumed leadership of the company last year, succeeding Padmaja Reddy, who was asked to step down abruptly following the differences with majority shareholder, Kedaara Capital on various issues, including a proposal to sell Spandana to Axis Bank.
Elaborating on Vision 2028, Saxena said Spandana is looking to diversify its borrowing mix by raising its reliance on bank borrowing to 60-70% of total liabilities from 49% currently. It seeks to reduce borrowing from capital markets, which is at 28% of liabilities and raise its share of external commercial borrowing to 15-20%.
The NBFC is looking to cut credit cost to under 2% and a return on assets of 4.5%. It also seeks to expand its branch network to 1,950 from the current 1,502 and grow its customer base to 6.2 million. Spandana has no plans to raise capital till FY28. Its capital adequacy is at 36%, and is likely to be 23-24% by the end of FY28. ““In fact, Spandana will not require capital till FY28, even though capital adequacy will be 23-24%, but will need about ₹600 crore for Criss Financial to grow its AUM to ₹3500 crore,” he said.