A person familiar with the conversation said, ‘The talks are still in the early stages. Both NBFCs and small finance banks are looking for partners for different reasons and this is one such thing. There may or may not be a deal.
Clix Chairman Pramod Bhasin and SSFB CEO R Bhaskar Babu did not immediately respond to calls on their phones.
Clix is looking for the perfect fit to address the funding constraints of an NBFC. A deal with SFB will provide cheaper retail deposits and access to a wider network of branches.
For SSFB, this means adding a deep-pocketed investor in Mumbai-based private equity investor Aion Capital Partners.
AION Capital Partners owns 85% of Clix, which in turn is a partnership between Apollo Global Management and ICICI Venture, a VC fund and wholly owned arm of ICICI Bank.
Clix has a loan book of over Rs 5,000 crore, of which about a quarter is for micro and small enterprises and individuals. This book is well matched with SSFB’s loans to small entrepreneurs and micro borrowers.
In addition to capital, SSFB will also benefit from Clix’s digital lending capabilities, underwriting prowess 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 mounting stress on asset quality.
Gross NPAs rose to 9.5% at the end of June, 11 basis points higher than three months ago. It wrote off Rs 79 crore during the quarter. Net NPA was 4.5% as compared to 4.7% reported on 31 March 2021.
Provision including restructured loans doubled to Rs 111 crore from Rs 54 crore a year ago. Its total loan book stood at Rs 4004 crore at the end of June.
“Clix’s capital inflow and expertise will certainly be beneficial for SSFB, which has been hit hard by the impact on collections in the second Covid wave. But it could be one of the few they are talking to. All NBFCs are looking to consolidate their position. Having survived the previous liquidity crisis and a small finance bank is a good option. Let us see which deal turns out to be successful,” said a senior executive of an NBFC.
Shares of SSFB rose 20% to Rs 179 per piece in early trade on BSE, while the 30-share Sensex was down 0.31%.