Asirvad Microfinance Limited, the microfinance subsidiary of Manappuram Finance Ltd, is planning to raise around Rs 500 crore from private equity (PE) funds. Ahead of the fundraising, the microfinance firm is planning to raise Rs 150 crore from promoters.
Raja Vaidyanathan, MD at Asirvad Finance said that by next month the company is planning to raise Rs 150 crore from promoters through a rights issue. Within five months, after the rights issue, the company plans to raise Rs 500 crore from PEs.
The money will help support the growth and also back the company’s CAR. Today, the company's CAR is at around 20 per cent and the company wants to maintain it at around 18-20 per cent.
The company has started informal discussions with PEs as it looks for an investment banker.
As far as portfolio growth is concerned, the company hopes to close the year with 50 per cent growth. Recently, the company crossed the Rs 3,000 crore AUM milestone and expects to reach around Rs 3,500 crore by the end of the current fiscal. The company hopes to double it to around Rs 5,000 crore by the end of the next financial year. The company is also expected to start the IPO process by that time and has set a target to list the company in 2020-21.
The company securitised microfinance portfolio, amounting to Rs 250 crore, with a PSU bank in December 2018. This was the eighth tranche of securitisation for the year and the total pool securitised with different banks during the current fiscal amounts to Rs 611 crore.
Vaidyanathan said that the microfinance industry has shown clear signs of tiding over demonetization woes. The gross loan portfolio (GLP) of MFIs grew at a compounded annual growth rate (CAGR) of 49 per cent between fiscals 2014 and 2018, fuelled by the extraordinary growth in GLPs of some large players.
Going forward, it is expected that the MFI loan portfolio will grow at a relatively slower 26 per cent between fiscals 2018 and 2020, as rural areas in some states mature and the focus of some top players, who have converted into small finance banks, shift towards selling other banking products.