Capital First May Buy Stake In Satin Creditcare Via Convertible Preference Shares

Mumbai-based Capital First Ltd. may become a stakeholder in microfinance lender Satin Creditcare Network Ltd.

On Saturday, the board of Satin Creditcare approved issue of 12.30 lakh optionally convertible redeemable preference shares to Capital First at issue price of Rs 284.53 each. This works out to an investment of Rs 35 crore if converted at the issue price and an equity stake of 3.15 percent.

The proposed offer to issue shares on preferential basis to Capital First was a part of strategic planning and initiatives of the company, Satin Creditcare said in its exchange filing.

The promoter group held 31.74 percent stake in Satin Creditcare Network as of April 21. Capital First does not hold any stake in microfinance lender currently.

Satin Creditcare, which claims to be the third largest microfinance institution in terms of gross lending portfolio as on March 31, 2017, provides collateral-free micro-credit facilities to economically active women in rural and semi-urban areas across 16 states in India.

Capital First may benefit from Satin Creditcare's well developed rural network. According to the company's website, Satin Creditcare had 26.5 lakh clients and assets under management (AUM) of Rs 4,067 crore as on March 31. While Capital First has financed more than 40 lakh customers and has loan assets of Rs 19,824 crore as of March 31.

Shares of Satin Creditcare Network rose as much as 5.2 percent to Rs 316.60 in opening trade.

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