Muthoot Microfin looking at listing in March

Mumbai: Muthoot Microfin, the micro finance arm of Muthoot Pappachan Group (MPG), may list in the local stock market as soon as mid-March, chairman Thomas John Muthoot said in an interview. The Rs 500-crore IPO together with another Rs 500-crore offer for sale for institutions will dilute the promoter stake in the company to 70 per cent from 86 per cent currently, Muthoot said.

The company received a go ahead from the Securities and Exchange Board of India (Sebi) in October last year and will file an update red herring prospectus in the next few days, setting the stage for a possible listing by mid-March.

“We need capital as we are growing at a compounded annual growth rate of more than 50 per cent and expect to continue to grow at the same pace. Going to the equity market is a logical step for us in this high growing market,” said Sadaf Sayeed, CEO at Muthoot Microfin.

Kerala-based MPG started its microfinance business in 2010. It’s flagship, Muthoot Fincorp, deals in gold loans and loans to micro and small enterprises. The microfinance company was a subsidiary of Muthoot Fincorp till it was spun off. It will be the second company to be listed from the MPG stable after Muthoot Capital services, which deals in two-wheeler loans.

“Our company specialises in loans to low income, informal sector and microfinance being targeted for that segment, we can gain from our experiences in other businesses. We can leverage our other businesses and generate cross-selling opportunities for microfinance,” Thomas John Muthoot said.

The average ticket size in the microfinance business is Rs 30,000, while for gold and MSME loans it is Rs 31,000. The group also has a housing finance arm. It plans to leverage all these businesses. Total microfinance loans are at around Rs 3,000 crore, spread across 537 branches and 17 states. The average loan tenure is about 18 months.

In the first nine months of the fiscal, the microfinance company made a net profit of around Rs 100 crore with net NPA of 1.47 per cent. The company’s net interest margin is around 12.15 per cent. It also plans to sell its microfinance loans to banks wanting to make up their priority sector targets.

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