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Sunday, December 8, 2013

Muthoot plans new NCD issue

Encouraged by a strong response to its recent NCD issue, Muthoot Finance will tap the market with a similar debt offering, its Managing Director George Alexander Muthoot said.

In November, the gold loan company had mobilised Rs 300 crore through a non-convertible debenture issue.

About 25,000 retail investors subscribed to the offer, the company’s sixth NCD issue, and this has encouraged it to look at a higher issue size for the seventh NCD issue, Muthoot told Business Line here on Saturday.

The company is now looking at an issue size of Rs 250 crore with a green shoe option of Rs 250 crore for the upcoming NCD issue, likely to open on December 16.

This will be the third debt issue by the company this fiscal, with the first one hitting the market in September to mop up about Rs 300 crore.

“We need to deepen our debt markets. Muthoot Finance is also trying to bring more people into the debt (securities) market,” Muthoot said.

To encourage retail participation in the debt market, Muthoot Finance has been incurring certain costs (like stamp duty) involved in the opening of a demat account by retail investors.

With market regulator SEBI now allowing investors to open demat accounts sans stamp duty, the debt market activity may see some boost, say market observers.

“The SEBI move to do away with stamp duty for opening demat accounts could help spur activity,” Muthoot said.

He further said the company’s strategy of diversifying its resource base and reducing its reliance on bank loans is working well.

Towards this end, it has tapped the market with several NCD issues over the past few years, he pointed out.

Going forward, it will repay more of its higher cost bank loans out of the resources mobilised from the NCDs.

To sponsor event

Muthoot Finance will be the title sponsor of the Cochin International Half Marathon to be held on December 29.

Source: thehindubusinessline
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