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Tuesday, January 10, 2012

Muthoot Fincorp plans to raise Rs 500-600 cr via private equity route

Non-banking finance company, Muthoot Fincorp Ltd, is looking to raise about Rs 500-600 crore from private equity investors, by offloading 5-6 per cent stake.

The investor could also be a financial institution, which could cross-sell Muthoot's products, said Mr Thomas John Muthoot, Chairman and Managing Director, Muthoot Fincorp.

Muthoot Fincorp, which is the flagship company of the Muthoot Pappachan Group, had a paid-up capital of Rs 181 crore and net owned funds of Rs 766 crore as on end-September 2011. The target is to increase the net owned funds to Rs 1,100 crore by March 2012, Mr Muthoot said.

The company's mainstay is loan against gold. The outstanding portfolio is currently at 6,500 crore and the target is to increase it to Rs 8,500 crore by March 2012.

“Even though many banks are pushing gold loans, for them it is just one of the activities. For NBFCs like us, it is the core activity,” Mr Muthoot said.

To diversify its income sources the company is looking to add more products to increase fee income, such as money transfer and distribution of insurance. “Ultimately we want to increase fee income to 30 per cent of total income. Right now it is only 3-4 per cent,” Mr Muthoot said.

Branch network

Muthoot Fincorp currently has a branch network of 1,650, which it plans to increase to 2,600 by March 2012 and to 4,500 by March 2013.

The company is also is looking to hive off its microfinance business into a separate microfinance institution (MFI) to meet regulatory requirements. It is in the process of acquiring another NBFC for this purpose, as it would be quicker than registering a new MFI.

The microfinance portfolio of about Rs 100 crore is spread across Kerala, Karnataka and Tamil Nadu.


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