Muthoot Finance, the second gold finance company to enter the capital market, plans to raise around Rs 900 crore through its initial public offering. The price band for the IPO has been fixed between Rs 160 and Rs 175.

The IPO will open on April 18 and close on April 20 for QIB bidders and on April 21 for retail and non-institutional investors.

The company will raise Rs 824 crore at the lower end of the price band and Rs 901.25 crore at the higher end. “The proceeds of the IPO will be used to meet the capital adequacy requirements of the company and provide for funding of loans to customers,” said Mr Oomen K. Mammen, Chief Financial Officer, Muthoot Finance.

The issue constitutes of 13.85 per cent of the post-issue paid-up capital. The promoters currently hold 93 per cent of the company. Post-issue, the promoter holding would come down to 80 per cent, added Mr Mammen.

With 2,600 branches in the country, the company plans to expand its branch network and target new customers. Muthoot Finance has assets worth Rs 13,000 crore under management and an average ticket size of Rs 31,000. “We are present in 21 States, except the North-East. We would like to be present in that part of the country as well as soon as the situation there improves,” said Mr George Alexander Muthoot, Managing Director, The Muthoot Group. Almost 75 per cent of the business of the company comes from the Southern States. However, there is no difference in the average ticket size across States.

The cost of borrowing for the company is at 9.5 per cent, while the lending rate begins at 12 per cent with a cap of 30 per cent on the upper limit.

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