Muthoot Finance NCD issue to open on March 2

Muthoot Finance Ltd, a gold loan company, will launch another non-convertible debenture (NCD) issue on March 2, its Managing Director, Mr George Alexander Muthoot, has said.

The company will look at mobilising Rs 500 crore primarily from retail investors, including a green-shoe option of Rs 250 crore. The NCDs are to be listed at the Bombay Stock Exchange (BSE).

This will be third NCD issue by the company this fiscal. The first one was in August last year when the company mobilised Rs 690 crore at a coupon of 12 per cent. Muthoot Finance , through the second NCD issue in January this year, raised Rs 475 crore at a coupon of 13-13.25 per cent.

In the second NCD, more than 50 per cent of the money came in the 3-year and 5-year tenor NCDs, which carried a coupon of 13-13.25 per cent. More than 50 per cent of the investors were retail investors including many from North and Western regions, where the company is not that well known.

“We continue to focus on NCDs as we want to have diversified funding and not entirely rely on banks and mutual funds. Not relying on a single source is always better. We need funding as our loan book has grown by Rs 8,000-9,000 crore this year,” Mr Muthoot said.

The third NCD issue will have four variants — two years, three years, five years and five-and-a-half years. The company is likely to raise five-and-a-half year money at 13.25 per cent. The actual coupon rates for the NCD issue will be decided on February 29.

On why Muthoot Finance is looking to raise funds through listed NCDs in small doses, Mr Muthoot said the company had earlier not looked at listed NCDs. It is only in the current fiscal that it had gone in for listed NCDs and tested the market, he said

Muthoot Finance is going ahead with the proposed NCD at coupon of 13-13.25 per cent, despite wide expectations that interest rates will start softening post March.

“I am looking to diversify my funding even at the cost of 1 per cent more in interest rates. I may get money at 1-1.5 per cent cheaper after some months or years. My growth is coming now.

I can't wait for the interest to come down so that I can increase my loan book. When demand is there I should increase my loan book. The nature of my loan is only retail loans,” Mr Muthoot said.

krsrivats@thehindu.co.in