“The talks are still in early stages. NBFCs and small finance banks are both scouting for partners for different reasons and this is one such talk. A deal may or may not fruitify,” said a person familiar with the talks.
Clix chairman Pramod Bhasin and SSFB CEO R Baskar Babu did not immediately respond to calls on their phones.
Clix has been in the look out for a perfect fit to tide over the funding handicaps of a NBFC. A deal with a SFB will give ut access to cheap retail deposits and a wide network of branches.
For SSFB it means an addition of a deep pocketed investor in Mumbai based private equity investor Aion Capital Partners.
Clix is 85% owned by AION Capital Partners, which in turn is a partnership between Apollo Global Management and ICICI Venture, a VC fund and wholly owned arm of ICICI Bank.
Clix’s loan book is more than Rs 5,000 crore, about a quarter of which is to micro and small enterprises and individuals. This book matches well with SSFB’s loans to smalll entrepenuers and micro borrowers.
Besides the capital SSFB will also gain from Clix’s digital lending capibilities, underwriting skills and access to new technology.
SSFB reported a net loss of Rs 48 crore for the June quarter as against a net profit of Rs 27 crore in the year-ago period as its provisions and contingencies more than doubled amid rising stress on asset quality.
Asset quality deteriorated with gross NPAs rising to 9.5% at the end of June, 11 basis points higher than what it was three months back. It wrote off Rs 79 crore during the quarter. Net NPA was 4.5% compared with 4.7% reported on 31 March 2021.
Provisions doubled to Rs 111 crore from Rs 54 crore a year earlier including for restructured loans. Its total loan book at the end of June was Rs 4004 crore.
“Clix’s capital infusion and expertise will certainly be beneficial for SSFB which has been hit hard due to an impact on collections in the second Covid wave. But this could be one of the few they are talking to. All NBFCs are looking to fortify their positions after surviving the last liquidity crunch and a small finance bank is a good option. Lets see which deal is successful,” said a senior executive from an NBFC.
SSFB shares soared in early trade at the BSE rising 20% to Rs 179 a piece even as the 30-share Sensex was down 0.31%.