Muthoot Fincorp NCD issue hits market on Thursday

Leading gold loan player Muthoot Fincorp will launch its first public issue of secured, redeemable, non-convertible debentures on Thursday.

This marks its entry into the debt capital market. The NCDs would have a face value of ₹1,000 each aggregating up to ₹100 crore with the option to retain oversubscription up to ₹100 crore.

The issue has been rated ‘CRISIL A’ by Crisil. SMC Capitals are Lead Managers to the issue. Investors may lock in at an interest rate of between 10.75 per cent and 12 per cent depending on the monthly, annual and cumulative options.

The issue offers 10 investment options and effective yield of up to 12 per cent and closes August 4. The minimum investment amount for all options is ₹10,000.

The funds raised through this issue will be utilised by the company for building up of loan portfolio.

The net worth as on March 31, was ₹1,249.85 crore and the capital adequacy ratio, 21.01 per cent.

Thomas John Muthoot, Chairman and Managing Director, Muthoot Fincorp, told BusinessLine that the raising of loan-to-value ratio of 75 per cent (from 60 per cent) has helped improve its core business.

The first quarter of 2014-15 saw business grow at 20-22 per cent, though it paled against the robust 100-150 per cent growth during the heydays not too far ago.

He expects the growth to sustain in the coming quarters. Muthoot Fincorp has around 35 tonnes of gold in its lockers as loan assets.

The company is working to sort out the disadvantage of being known as a non-diversified player and now offers a mix of retail offerings.