Gold loan company Muthoot Finance to raise upto Rs 2,000 cr via debentures

Gold loan company Muthoot Finance Ltd plans to raise upto Rs 2,000 crore through public offering of Secured Redeemable Non-Convertible Debentures (NCDs) to deploy funds in lending business.

The proposed debenture issue will have a base issue size of Rs 100 crore with an option to retain oversubscription upto Rs 1,900 crores aggregating upto tranche limit of Rs 2,000 crore.

The issue opens on October 27, 2020 and closes on November 20, 2020 with an option to close at an early date or extend the date to be decided by the Board of Directors or NCD committee.

The Secured NCDs proposed to be issued under this Issue have been rated “AA” by CRISIL and “AA” by ICRA. These ratings indicate “high degree of safety regarding timely servicing of financial obligations”.

The NCDs are proposed to be listed on BSE. The allotment will be on first come first serve basis.

There are 6 investment options for Secured NCDs with ‘Monthly’ or ‘Annual’ interest payment frequency or ‘on maturity redemption’ payments with coupon of 7.15-8.0 per cent (per annum).

George Alexander Muthoot, Managing Director, Muthoot Finance Ltd, said the issue will augment the company’s long term funding requirements thereby supporting the stable growth that our company envisages.

The Lead Managers to the Issue are Edelweiss Financial Services, J M Financial, Equirus Capital and A. K. Capital Services.

According to rating agency ICRA the consolidated portfolio stood at Rs 46,501 crore as on June 30, 2020 compared to Rs 46,871 crore as on March 31, 2020 (Rs 40,228 crore as on March 31, 2019). The share of gold loans was 87 per cent, followed by micro-finance six per cent and housing four per cent. It capital adequacy ratio was 26.3 per cent (standalone basis) at end of June 2020.

The company operates through an extensive pan-India branch network of 4,573 as on June 30, 2020 with 60% of it being in south India.