MICROCAPITAL BRIEF: India’s Muthoot Microfin to Raise $80m from Private Equity Investors for Expansion, Infrastructure Expense

Muthoot Microfin Limited, a microlending member of the Muthoot Pappachan Group (MPG), which is based in the state of Kerala, India, announced recently that it plans to raise INR 5 billion (USD 80 million) from private equity investors to fund the company’s capital expenditure, infrastructure and expansion plans. The microfinance institution, which received a license earlier in 2015 to function as a non-banking finance institution from the Reserve Bank of India, the country’s central bank, also announced that the promoters would infuse additional equity of INR 2 billion (USD 32 million) into the organization. Muthoot Microfin operates in the states of Goa, Gujarat, Karnataka, Kerala, Maharashtra and Tamil Nadu, and it intends to hire 3,000 people over the next two years [1].

Also, Microloans worth INR 15 billion (USD 238 million) that were extended by the group’s flagship financial services arm, Muthoot Fincorp, will be transferred gradually to Muthoot Microfin [2]. For the financial year ending March 2014, Muthoot Fincorp reported a paid-up capital of INR 1.87 billion (USD 30 million) and a net worth of INR 12.5 billion (USD 198 million). The group also aims to have an initial public offering by 2018.

By Arpita Sarkar

About Muthoot Pappachan Group:
Established in 1887, the Muthoot Pappachan Group (MPG) is an Indian business conglomerate with a presence in the financial services, hospitality, automotive, real estate, infrastructure, information technology services and healthcare sectors. Muthoot Fincorp is the group’s flagship financial services arm. Other companies in the group include Muthoot Capital Services, Muthoot Housing Finance Company, Muthoot Risk Insurance and Broking Services Private Limited and Muthoot Exim Private Limited.  Another member of the group, Muthoot Mahila Mitra, offers microfinance that focuses on empowering women through financial literacy training. For the financial year ending March 2014, Muthoot Fincorp reported a paid-up capital of INR 1.87 billion (USD 30 million) and a net worth of INR 12.5 billion (USD 198 million). Microloans worth INR 15 billion (USD 238 million) that were extended by Muthoot Fincorp, will be transferred gradually to Muthoot Microfin Limited, another microlending member of the group. Muthoot Capital Services is listed on the Mumbai-based Bombay Stock Exchange, with a revenue of INR 1.59 billion (USD 25.2 million) and profit-after-tax of INR 222 million (USD 3.52 million) for the half-year ending September 2014.

Sources and Additional Resources:

[1] Business Standard: “Muthoot Microfinance to raise Rs 500 cr from PEs,” http://www.business-standard.com/article/finance/muthoot-microfinance-to-raise-rs-500-cr-from-pes-115051400009_1.html

[2] Live Mint: “Muthoot Pappachan Group goes back to roots with planned microfinance unit,” http://www.livemint.com/Companies/l3tBBv1zUaiHcmOa1Q0tvO/Muthoot-Pappachan-Group-goes-back-to-roots-with-planned-micr.html

MicroCapital, January 19, 2015, “MICROCAPITAL BRIEF: Muthoot Finance, FIS to Bring Automated Teller Machines (ATMs) to Rural India,”https://www.microcapital.org/microcapital-brief-muthoot-finance-fis-to-bring-automated-teller-machines-atms-to-rural-india/

MicroCapital, July 21, 2014, “MICROCAPITAL BRIEF: National Housing Bank (NHB) of India Approves Muthoot Finance to Offer Home Mortgages,” https://www.microcapital.org/microcapital-brief-national-housing-bank-nhb-of-india-approves-muthoot-finance-to-offer-home-mortgages/

MicroCapital, April 22, 2013, “MICROCAPITAL BRIEF: Muthoot Fincorp of India to Offer $19m in Non-Convertible Debentures to Fund Continued Diversification from Gold Loans to Microfinance,” https://www.microcapital.org/microcapital-brief-muthoot-fincorp-of-india-to-offer-19m-in-non-convertible-debentures-to-fund-continued-diversification-from-gold-loans-to-microfinance/

MicroCapital, December 13, 2010, “MICROCAPITAL BRIEF: Muthoot Fincorp, ACCION International Join to Increase Microfinance Lending in India,” https://www.microcapital.org/microcapital-brief-muthoot-fincorp-accion-international-join-to-increase-microfinance-lending-in-india/

MicroCapital Universe Profile: Muthoot Finance Limited (Muthoot Fincorp), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Muthoot+Finance+Limited

MicroCapital Universe Profile: Muthoot Pappachan Group, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Muthoot+Pappachan+Group+%28MPG%29

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