SBP okays acquisition of FINCA Bank

TPL, Abhi 94% shareholding expected to strengthen microfinance sector

KARACHI:

The State Bank of Pakistan (SBP) has given final approval to TPL Corp and Abhi to acquire a 94.8% shareholding in FINCA Microfinance Bank Limited, while also opening up investment in other Microfinance Banks (MFBs) seeking equity injection. Economic and tech analysts suggest this is a positive development for Pakistan's struggling economy.

The SBP has conveyed its final approval to TPL Corp Limited ("TPL") and Abhi (Private) Limited ("Abhi") for the acquisition of up to 94.8% shareholding in FINCA Microfinance Bank Limited ("Acquisition"), subject to compliance with applicable laws, rules, regulations, and terms and conditions of the SBP.

According to a notification issued by the Pakistan Stock Exchange (PSX), TPL and Abhi are in the process of completing all the requirements necessary for the successful consummation of the acquisition.

Eminent economist Dr Shahid Hassan Siddiqui remarked that FINCA was a struggling entity facing heavy losses due to management issues. He noted that the SBP's approval is beneficial, as it took several months for the central bank to give the final nod. He added that, with the right expertise and skilled staff, MFBs can turn profitable, which would benefit small clients. Currently, MFBs face challenges in Pakistan as larger commercial banks are also financing microfinance.

Pakistan Microfinance Network CEO Syed Mohsin Ahmed stated, "I fully support this acquisition. This will open up investment in a couple of more MFBs that are looking for equity injection."

Pakistan Fintech Network CEO Fahad Sajjad said the consortium of TPL and Abhi is a promising partnership. TPL, as a large group, operates across multiple sectors in Pakistan, including mobile value-added services, tracking, and insurance. In contrast, Abhi is a pure fintech company providing innovative services. According to Sajjad, "When innovation and capital come together, it's a perfect match, offering digital lending services that allow the organisation and industry to grow. This is good for financial inclusion and will make life easier for a major part of the local population."

Tech expert Muhammad Yasir noted that the acquisition of a foreign MFB by local companies is an encouraging sign of the strength of local entities in fields like technology and finance. He highlighted that TPL and Abhi bring extensive local market experience and a good understanding of relevant challenges and solutions.

He added that the two companies have the opportunity to leverage the bank's extensive network of over 100 branches to consolidate microfinance services across more than 100 cities in Pakistan. They may also introduce innovative products and services, such as early wage access and insurance.

"The most interesting part of this acquisition deal is that this is the first time a local fintech company has acquired stakes in a microfinance bank along with a partner. This could set a trend for other fintech players and tech companies to expand their investments in the financial sector," he said.

Over the last decade, FINCA Pakistan has empowered millions of Pakistani families through lending, savings, and financial education. The bank has consistently been recognised for its excellence in customer experience and has introduced several innovations to the microfinance market, including the country's first mobile network-agnostic digital wallet. With a presence in over 100 cities across Pakistan, FINCA has made significant strides in supporting women entrepreneurs.

The new entity will continue offering a wide range of innovative financial products. These solutions aim to provide individuals and small businesses with the financial tools they need to thrive, advancing Pakistan's path toward economic empowerment and inclusion.

"FINCA Pakistan delivered on its promise to develop a nationwide microfinance network that creates economic opportunities across Pakistan, especially for women," said Jeff Smith, Chair of the FINCA Pakistan Board of Directors. "Abhi and TPL share FINCA's commitment to expanding access to financial services for small entrepreneurs. The infusion of new capital and more comprehensive digital services could significantly accelerate financial inclusion in Pakistan."

"At Abhi, we've always believed in creating accessible financial solutions for everyone," said Omair Ansari, CEO & Co-founder of Abhi. "By joining forces with TPL, we're taking a stride towards expanding our reach and delivering impactful financial products to millions of Pakistanis who previously lacked access to essential services."