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| Baring PE, Matrix India buy stake in Muthoot Finance |
| BS Reporter / Mumbai Jul 30, 2010, 00:31 IST |
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Muthoot Finance on Thursday said it had raised Rs 157 crore from private equity firms – Baring Private Equity Partners India and Matrix India – by selling fresh shares amounting to 4 per cent of its paid-up capital.
Shares in Muthoot Finance, the flagship company of the Kochi-based Muthoot George Group, hitherto a 100 per cent family-owned company, were sold to the private equity firms for Rs 123 each. The company’s total paid-up capital, excluding reserves, after the capital infusion will be Rs 313 crore.
Barings Private Equity and Matrix follow Sequoia Capital in investing in gold finance firms. Sequoia Capital, which acquired 11.5 per cent in Kerala-based Manappuram General Finance and Leasing in 2007 and 2008 at Rs 145 and Rs 165 a share, respectively, earned almost five times on its investment in less than four years. It exited this April after selling its entire stake for Rs 740 a share.
“In this business, we need capital on an ongoing basis and are not ruling out more private equity deals or an initial public offering in the future,” said George Alexander Muthoot, managing director, Muthoot Finance. The financier’s loan book exceeds Rs 9,000 crore and it has 1,800 branches across the country.
“Our target is to build our loan book to Rs 15,000 crore by the end of the current financial year,” K Padmakumar, executive director, Muthoot Finance, told reporters in Mumbai. “We will also increase our branch count to 2,000.”
The additional capital will push up the non-banking finance company’s capital adequacy ratio to 16 per cent from about 14 per cent as of March 31, 2010. Padmakumar said the capital would be used to expand its loan book and expected the infusion to be absorbed quickly.
The Muthoot George Group has interest in 16 segments, including hospitality, education, media, housing and infrastructure. However, the gold finance business under Muthoot Finance brings in 95 per cent of the group’s revenues.
There are only four large firms in the country that exclusively focus on gold finance — three of the south-based Muthoot group and the Muthoot Pappachan group, along with Manappuram General Finance and Leasing.
Public sector banks, private banks and NBFCs are players in the organised segment, which has registered 35-40 per cent growth over the past few years. The sector is expected to reach a size of Rs 50,000-53,000 crore by the end of the current financial year.
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