Adani Group’s arm announces acquisition of another asset of debt laden Essel Group

Recently, non-banking financial company (NBFC) arm of Adani Group announced the acquisition of Essel Finance’s micro, small and medium enterprises (MSME) loan business. Adani Capital Pvt. Ltd. has secured a loan book of around INR 145 crore operating across 10 cities with 40 employees and approximately 1000 customers.

The Subash Chandra led- Essel group is witnessing severe cash crisis, this is the second debt-laden asset of the group that Adani Capital has acquired. Last year, Essel Group had announced selling its 205 megawatts operational solar energy assets at a value of INR 1,300 crore to Adani Green Energy Ltd.

While commenting on the development, chief executive of the Adani Finserve Pvt. Ltd., said, “The acquisition complements our existing MSME business and helps us expand to new geographies, including Noida and Chennai.” He also added, “We operate in similar segments, which is secured lending focused on income-generating borrowers. It was an opportunistic acquisition for us; in the next 6-12 months we are more focused on improvising processes, leveraging technology and on productivity improvements.”

Adani Finserve runs its lending business through two if its firms -Adani Capital and Adani Housing Finance. Adani Housing Finance provides loans for affordable homes and do not lend to the realty developers for project construction while Adani Capital focuses on providing loans to micro and small entrepreneurs engaged in four areas -commercial vehicles, primarily tractor loans to farmers, MSME loans and supply chain.

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Gupta said that to get formal finance at very reasonable rate of interest is difficult in the segment, Adani Capital see this as an opportunity to become most economical and convenient lender in the said segment. He also said that the housing finance business and NBFC had a loan book of INR 1,100 crore as on December. With over 18,000 customers, the total NPA of the company stood at just INR 2.4 crore.

Adani Group largely operates in western India and is aiming to expand its geographic presence in central and east India. “We will look to expand the business to eastern states. We are evaluating Madhya Pradesh, Chhattisgarh and Orissa. You could see us enter these states around mid of next fiscal,” said Gupta.

Adani Capital operates in Gujarat, Maharashtra, Rajasthan and Karnataka with 56 branches, while Adani Housing Finance is present in Gujarat, Maharashtra and Rajasthan with 27 branches.

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