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Muthoot Microfin, (the micro finance arm of the Muthoot Pappachan Group) is planning to raise private equity (PE) investment to the tune of ₹100 crore this fiscal. Promoters will shortly be investing ₹50 crore in addition to the ₹50 crore they had invested earlier, taking the capital base to ₹100 crore before December-end.
Sadaf Sayeed, Chief Executive Officer, Muthoot Microfin, said that the company hopes to build an income generating portfolio of ₹1,250 crore this year, for which it would require an equity base of ₹200 crore.
(This portfolio was at ₹950 crore at the end of the previous fiscal. Apart from this, the microfinance company also has other loans, including dairy loans, securitised loans, and business correspondent loans, all of which together make up a portfolio of ₹1,750 crore).
Bank debt The portfolio has been practically doubling every year. Profit before tax (PBT) also followed a similar trajectory and moved to ₹123.64 crore in the last fiscal. Leveraging on the fresh equity, the microfinance company is planning to raise ₹1,000-1,200 crore of bank debt.
“We have already received in-principle sanction worth ₹295 crore from multiple banks. Just this month, we have concluded two debt transactions for MML, one with South Indian Bank for ₹25 crore and another with a Chennai-based NBFC, IFMR, for ₹34 crore,” Sadaf said.
Till last fiscal, most of the microfinance business was housed under its parent, Muthoot Fincorp, which is primarily a gold loan NBFC. After receiving NBFC-MFI license (for microfinance NBFCs) for Muthoot Microfin (a 98 per cent subsidiary of MFL,) earlier this year, the microfinance business is being built under the new entity, Sadaf said.
Operating regions Muthoot Microfin now operates across nine States. The company follows the grameen model, where it gives ₹10,000-15,000 to each member of a joint liability group, and recovers the loan within 52 weeks.
“We operate with a hub-and-spoke model through close to 1,600 of our parent’s branches. The company serves 1.1 million customers and expects to touch 1.5 million by end of the fiscal. The portfolio is good and the default rate is at just about 0.27 per cent,” Sadaf said.
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