Muthoot Capital raises Rs 165 cr via QIP, dilutes 12.5% stake

Muthoot Capital Services, an arm of the Muthoot Pappachan Group, has raised Rs 165 crore through a qualified institutional placement to shore up its tierI capital base through which it has diluted the promoters stake by 12.43 per cent.

After the issue, promoters stake has come down by 12.43 per cent to 62.5 per cent from 74.93 per cent, the company said.

The QIP was snapped by mutual fund majors like Birla, DSP Blackrock, IDBI, SBI, Sundaram and other investors like Morgan Stanley, Aurigin Master Fund Singapore and Goldman Sachs, group director Thomas George Muthoot who is also the managing director of the company told PTI from Kochi.

The issue enhances the capital adequacy position of the company to 26.70 per cent from 15.40 per cent as of September 30, the Kochi-based group said, adding this has increased its debt leveraging 2.9 times.

The capital raised will strengthen our balance sheet, facilitate growth and lower our borrowing costs. It will also be an impetus for further growth and moving into new products," Muthoot said.

He said the company has over the past 18 months been steadily diversifying into the non-South markets, and controlling operating costs and improving asset quality.

He also said the company will be looking at additional sources of funding through NCDs and more securitization transactions to drive its planned growth.

Muthoot Capital Services is into two-wheeler loans, which accounts for 89.50 per cent of its gross portfolio of Rs 1,749 crore as of end September and is present in 17 states/Union territories.

It services over 2,200 dealerships in 15 states and has a strong presence with Hero and Honda, which together contribute more than 80 per cent of its total business.

The 130-year-old Muthoot Pappachan Group is into financial services, automotive, realty, hospitality, IT and alternate energy. Its flagship Muthoot Fincorp is the second largest gold loan player with over 3,800 branches.