Muthoot Microfin to divest 15% stake for 150 crore

Mumbai: Muthoot Pappachen Group firm Muthoot Microfin today said it is looking to divest up to 15 per cent stake to an overseas private equity firm for around Rs 150 crore by the first quarter of the next fiscal.

"We are already at an advanced stage of discussions with a US-based private equity firm. The promoters are ready to dilute 10-15 per cent stake depending on their interest. We are looking at raising Rs 150 crore and the promoters will infuse Rs 250 crore along with that," Muthoot Microfin Chief Executive Sadaf Sayeed told PTI here.

The move is part of fully hiving-off the microfin arm from the holding company Muthoot Fincorp, which is the second largest gold loan firm in the country, over the next 20-22 months, he added.

Muthoot Microfin is valued at over Rs 1,000 crore and out of the Rs 1,500-crore loan book, Rs 510 crore is in its own balance-sheet while the remaining asset is in the balance sheet of Muthoot Fincorp, he said.

Asked about loan growth, Sayeed said as of February the loan book stood at Rs 1,500 crore but he is confident of closing the year at Rs 2,300 crore.

He attributed higher business optimism from the budgetary proposal under which the government has done away with the tax on securitisation deals in the industry.

Sounding bullish on securitisation of loans, he said the company has already completed deals worth Rs 300 crore to Andhra Bank, Rs 25 crore to Dhanlaxmi Bank and will do another Rs 150 crore deals this month.

Of the completed deals, Rs 36 crore of PTC (pass through certificates) was with ICICI Bank and Rs 49 crore with IDBI Bank, and a direct assignment of Rs 50 crore with Dhanlaxmi Bank.

The company also plans to raise Rs 25 crore tier-II capital by issuing NCDs by the end of the month, Sayeed said.

With over 5 lakh customers, Muthoot Microfin is the largest MFI in its home state of Kerala, where the loan book is over Rs 650 crore.

Asked about profitability, Sayeed said he is confident of closing the fiscal with a net income of Rs 10 crore for Muthoot Microfin alone. The PBT (profit before tax) is expected at Rs 70 crore, including a retained profit of Rs 10 crore, and the company has set a target of booking Rs 60 crore net profit in the next fiscal year, he added.