Muthoot Finance to tap investors again to fund business growth

Muthoot Finance Ltd, a gold loan company, plans to later this month approach retail investors again with another non-convertible debenture (NCD) issue to mobilise about Rs 600 crore, including a green shoe option for Rs 300 crore, to fund business growth.

“The demand for gold loans is only going up. The second NCD issue is part of our efforts to diversify our resource avenues”, Mr George Alexander Muthoot, Managing Director of Muthoot Finance told Business Line here. He was in the capital for the inauguration of Muthoot Group's new corporate office for the Northern India region.

This would be the second NCD issue by the company this year. The first one was in August when the company had mobilised about Rs 700 crore at a coupon rate of 12 percent.

No equity capital

Muthoot Finance has no plans to raise equity capital this financial year, Mr Muthoot said. He, however, indicated that the company may raise equity capital after a year from now, either through private placement to qualified institutional buyers (QIBs) or from existing shareholders.

The company had earlier this year tapped the capital market with an initial public offer (IPO).

Muthoot Finance plans to open about 400 branches in North, East and Western India this financial year, Mr Muthoot said, adding that 350 branches had already been rolled out.

Several NBFCs have been offering interest rates of 12 percent on their NCDs, higher than the returns offered by public sector banks on fixed deposits with one year maturity.

krsrivats@thehindu.co.in