SBI Life Insurance Co Ltd, India’s largest private-sector life insurer, said Thursday it has acquired a 8.99% stake in microcredit company Paisalo Digital Ltd for Rs 186.20 crore ($25.3 million at current exchange rates).
SBI Life, which counts private equity giant Carlyle as its backer, has purchased 3.8 million Paisalo shares at Rs 489.99 apiece, the company informed the stock exchanges.
The insurance unit of State Bank of India, the nation’s biggest lender, didn’t disclose the rationale behind the investment.
Paisalo also counts state-run insurance behemoth Life Insurance Corporation (LIC) of India among its shareholders. LIC owns a 3.53% stake in the company while foreign portfolio investors hold 23.91% and other investors, 26.49%.
Paisalo promoters own 46.07% of the company. The company was incorporated in March 1992. It is a non-banking finance company registered with the Reserve Bank of India (RBI). Its business involves providing loans to individuals, small and medium-sized enterprises and to joint liability groups.
Paisalo operates through 129 branches across the country. In the last two years, the company’s loan book has grown at a compound annual rate of 7.6% even as operating profit and net profit have seen a decline.
It reported a loan book of Rs 1,725 crore for the year ended March 2020 compared with Rs 1,697.8 crore a year earlier and Rs 1,490.3 crore at the end of March 2018.
On the other hand, the company’s net profit stood at Rs 54 crore for 2019-20 compared with Rs 56.8 crore the year before and Rs 56.9 crore for 2017-18.
Paisalo’s operating profit fell to Rs 129 crore for 2019-20 from Rs 145.4 crore and Rs 172.3 crore in the previous two years.