Mon | Jul 16, 2018

Access Financial acquires another rival

Published:Friday | June 23, 2017 | 12:00 AMAvia Collinder
Marcus James, CEO of Access Financiial Services Limited.

Microlending company Access Financial Services Limited has acquired the assets of another rival, Micro Credit Limited (MCL), whose brand it plans to keep as a market retention strategy.

Access has bought Micro Credit's loan portfolio, fixed assets, and trade name. It's the second acquisition in a year in which it has held on to the company's identity, the other being a $180-million deal for Damark Limited, a company serving primarily government workers.

Access Financial CEO Marcus James said Micro Credit was acquired for $80 million. The company serves primarily microbusinesses, but also has a personal loan and motor vehicle loan portfolio. At purchase date on March 31, its net portfolio was valued at $92 million.

Micro Credit, formed in 2003, operates six branches spread across Kingston, Spanish Town, May Pen, Montego Bay, Mandeville, and Ocho Rios. James said the company would continue to operate as Micro Credit Limited from the existing branch locations.

"The business combination will see MCL continuing to serve microcredit customers using its existing methodologies which have been proven both locally and internationally in that segment of the market, resulting in above-average portfolio performance," he said.

"MCL uses the solidarity group lending methodology for its microfinance loans. The methodology was developed and made popular by the Grameen Bank in the 1970s and later used by MFIs in Latin America. The methodology requires that applicants place themselves in voluntary groups. The group then makes and application and members are collectively responsible for the repayment of the loan."

Prior to the takeover by Access, the owners of Micro Credit are listed on Companies Office of Jamaica as different corporate vehicles, but mainly Microcredit Foundation Inc, based in the United States, and an unnamed company registered in St Lucia. The directors were named as Vikram Dhiman, Joseph Matalon, William Massias and Michael Rauenhorst.

No intention to rebrand

James told Gleaner Business that he has no intention at this time to rebrand the new acquisitions.

"The brands that we have acquired have strong identity and customer loyalty in different segments of the microfinance market. Accordingly, we will continue to operate the entities using their original names," he said.

In a market filing about Micro Credit's purchase, he said Access would invest in the MCL brand to increase its visibility, grow the portfolio and increase its profitability.

"The alignment of the two entities will also result in efficiencies of scale," James said.

Access itself, with 17 branches, does more than $1 billion of business annually. The company is valued at $3 billion by assets.