Microfinance Private Equity

Muthoot Finance Stock hits upper circuit as it raises Rs 157cr from Baring,Matrix India.

Muthoot Capital Services stock hits upper circuit on the news that PE Funds have invested Rs 157 crore in Muthoot Finance.

Muthoot Finance is a NBFC with a loan book of more than Rs 9,000 crore.

Muthoot Finance Limited, a Kerala headquartered NBFC, has raised more than Rs 157 crore in its first institutional round of funding from Baring Private Equity Partners India and Matrix Partners India for a minority stake in the company. The money has been raised by issuing shares to the extent of 4% of the firm’s capital to Baring PE and Matrix India. Both the private equity firms now have a 2% stake each in the company, which is valued at $1 billion in terms of the current deal.

Barings Private Equity and Matrix follow Sequoia Capital in investing in gold finance firms in India. Sequoia Capital, which had acquired 11.5 per cent in Kerala-based Manappuram General Finance and Leasing in 2007 and 2008 at Rs 145 and Rs 165 a share, respectively, earned almost five times on its investment in less than four years. It exited the Manappuram in April after selling its entire stake for Rs 740 a share.

Muthoot Finance claims to be the largest gold loan company in India. The company has a loan book exceeding Rs 9,000 crore and more than 1,800 branches across the country. This capital infusion will further strengthen the capital base of the company. With this, the company has also transitioned from being a pure family owned business to an entity with external investors.

M.G.George Muthoot, Chairman of Muthoot Finance Limited addressing the media

Commenting on the PE investment to the meida , M.G.George Muthoot, Chairman of Muthoot Finance Limited, said that the Muthoot Group has been engaged in the business for the last 123 years and has an unblemished track record, trust and goodwill among customers and stakeholders alike and the inclusion of global investors into the company is a significant milestone and marks a new chapter in their journey.

Muthoot Capital Services hits upper circuit on news of the deal

According to a recent Business report, India is one of the largest gold markets in the world with an annual demand of 700 tonnes.As of 2009, gold stock in India was estimated at around 15,000 tonnes which translates into 10% of the total global gold stock.The organised gold loans market in India is estimated to be a Rs. 220-270 billion market with a CAGR of ~38% from FY02-09.

South India continues to account for the bulk of the gold loan market with a share of 85-90%,with organised gold loans from NBFC’s translating into a marginal 0.12% of the value of total gold stock in India.

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Muthoot Capital Services Ltd Share Price over a 1 Year Period

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