MICROCAPITAL BRIEF: Muthoot of India Raises $10m in MLDs for On-lending to Microfinance Borrowers

Muthoot Microfin Limited, a unit of Indian conglomerate Muthoot Pappachan Group whose focus is serving female entrepreneurs, recently raised INR 750 million (USD 10 million) via market-linked debentures (MLDs) that mature in 18 months. Muthoot Microfin CFO Praveen Thoroppady said, “[W]ith MLDs, we were able to raise funds at very competitive rates. Current MLD is listed at 10.25 percent, and going forward we expect this cost to go down by 50 to 75 basis points.”

The CEO of Muthoot Microfin, Sadaf Sayeed, added, “These funds will be utilised for disbursements to microfinance clients. We are expecting a rebound in the rural economy post the pandemic woes, and we are well-equipped to service the sector with ample [cash], operational reach and adequate resources. We also plan to close our USD 50 million equity fundraising very soon.”

For 2020, Muthoot Microfin reported gross annual income of INR 87.2 billion (USD 1.17 billion) on a loan portfolio of INR 416 billion (USD 5.56 billion). It had an average loan size of INR 51,000 (USD 682), 8 million loan accounts, 25,000 employees, and 4,500 branches in 29 states in India. Established in 1887, Muthoot Pappachan is active in the financial services, hospitality, automotive, real estate, infrastructure, information technology and healthcare sectors.

By Harriet Ritchie, Research Associate

Sources and Additional Resources

Mint article
https://www.livemint.com/companies/news/muthoot-microfin-raises-rs75-crore-via-market-linked-debentures-11626334286312.html

Muthoot Microfin homepage
https://www.muthootmicrofin.com/

Muthoot Microfin 2019-2020 annual report
https://www.muthootfinance.com/sites/default/files/2020-09/Muthoot-AR-2019-20.pdf

Muthoot Pappachan homepage
https://muthoot.com/

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