Differences over strategic selling led to the resignation of Spandana Sphoorty founder


MUMBAI: Padmaja Gangireddy, founder of Spandana Sphoorty Financial Ltd, the Hyderabad-based micro-lender, said she had to step down as managing director as the board decided not to extend her employment contract beyond the current duration.

The resignation was announced Tuesday evening on the stock market.

In her email to the company, Gangireddy claimed that the move was the result of disputes between her and the board of directors led by private investor Kedaara Capital over the sale of the company to Axis Bank.

“I objected to the lower price sale of (the) company to Axis Bank. While other MFIs have been acquired at multiples of 4.75x and 3.5x BV (book value) in recent months, Kedaara wanted to sell Spandana at 1.6x, which is a third of the valuation of the others. companies, ”she wrote.

“I really wanted to continue as MD for a few more years and limit my role to extending strategic direction to the company and the management team,” she added in the letter.

Gangireddy had founded Spandana in 1998. The microlender became one of the largest MFIs in the country before dealing with the microfinance crisis in Andhra Pradesh, which saw the lender find itself in a debt restructuring. enterprises.

The lender came out of debt restructuring in 2017, raising $ 270 million in funding. About $ 100 million came in the form of equity from a consortium led by Kedaara Capital, including the Ontario Teachers’ Pension Plan, and the remainder in the form of debt capital from IndusInd. Bank Ltd, Yes Bank Ltd and ICICI Bank Ltd.

Spandana was one of five microfinance companies referred to the CDR unit after the crisis in Andhra Pradesh.

The microlender went public in August 2019.

“When we came out of corporate debt restructuring in 2017, our portfolio was only 1,100 Cr. We’ve enlarged the book almost eight times in four years, which is a story. I don’t think there is an example in the world of a company increasing their net worth to 3000 Cr versus 1200 Cr negative, “she said in her email.

Spokesmen for Kedaara Capital and Axis Bank could not immediately be reached for comment.

Earlier Tuesday evening, the company said its board of directors had confirmed the hiring of a prominent industry veteran as the new chief executive officer and chief executive officer, and the establishment of a management committee. to provide strategic direction to business operations in the interim as part of the transition plan.

“Mr. KR Kamath, former chairman and managing director of Punjab National Bank and member of the board of directors of Spandana, will chair the management committee, which also includes two of the senior board members, Ms. Abanti Mitra. and Mr. Kartikeya Kaji. The existing management team of Spandana, including the Commercial Director, the Risk Director and the Company Secretary, will retain their current roles and manage the day-to-day operations of the company, ”said the Minister. company in its press release.

According to a person close to development who spoke on condition of anonymity, Shalabh Saxena, managing director and CEO of Bharat Financial Inclusion Ltd, will be named the new CEO of Spandana.

“The new Managing Director and CEO of Spandana brings with him extensive experience in various financial services companies, including leading one of the largest microfinance operations in India. He is currently serving his notice period in his current organization and is expected to join Spandana in the next quarter, “the company said in its statement Tuesday.

Spandana has also hired a new CFO, who will join the company at the same time, he added.

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