Muthoot Fincorp looks to raise up to Rs 800 crore through PE funding
Funds to be used to expand reach in new areas
Muthoot Fincorp Ltd, the flagship financial services firm of the Muthoot Pappachan Group is looking to raise Rs 600 crore to Rs 800 crore from private equity (PE) funds, to grow its fledgling microfinance business aggressively, said Thomas John Muthoot, chairman and managing director, on Thursday.
Muthoot Microfinance, which was a business division within Muthoot Fincorp, will be spun off into a separate company as the group has received an NBFC-MFI (non-banking financial company-microfinance institution) licence from the Reserve Bank of India earlier this year.
The Muthoot Pappachan Group, which is one of the pioneers and largest lenders of loans against gold in the country, said in a statement that Muthoot Microfinance, which began operations five years ago, is the seventh largest microcredit entity in India. It has a customer base of 1 million women borrowers and an asset book of Rs1,500 crore (as on March 31, 2015). The firm aims to double its loan book to Rs 3,000 crore in the next two years. It has operations across Kerala, Tamil Nadu, Gujarat, Karnataka, Maharashtra and Goa and plans to enter new regions like Odisha, Uttar Pradesh and Madhya Pradesh by the end of FY16. As it seeks to expand its reach, Muthoot Microfinance will utilise the PE money, along with additional equity of Rs 200 crore to be put in by the promoters.
The Group was formed after the three brothers who collectively started the gold loans venture in 1939–M George Muthoot, Muthoot M Pappachan and Muthoot Mathew–parted ways in 1975 to set up their separate loan-against-gold businesses. The unlisted Muthoot Fincorp disbursed gold loans worth Rs 15,500 crore in FY15. “The ultimate aim is to list Muthoot Fincorp by 2018,” says Thomas George Muthoot, director at Muthoot Fincorp, and Thomas John Muthoot’s brother.
