Sequoia Capital strikes gold in Manappuram Gold Loans – Gets 5x returns in 2 years

Sequoia has sold its entire 11% stake in Manappuram General Finance and Leasing Ltd, a non-banking finance company that provides gold loans through the open market for about Rs 340 crore. Sequoia had invested in the NBFC more than two years ago in 2007 by paying Rs 142 per share. However, the exit deal was concluded at about Rs 740 per share.

Five investment firms including Sloane Robinson, Algebris, Wellington and New Vernon are believed to have picked up the equity from Sequoia.The company is yet to confirm the details of the deal.

Manappuram gold loan stock

Manappuram General Finance and Leasing Ltd on the Bombay Stock Exchange

With assets under management of about Rs 2,550 crore as of March, 2010, Manappuram has emerged as one of the largest NBFC’s with a focus on gold loans in India. Mannappuram is currently managing about 24 tonnes of gold now which it keeps as pure collateral. There is 55,000 tonnes of gold in Indian households valued at Rs 50 lakh crore and hence the company sees huge possibilities in the gold loan sector.

Manappuram General Finance and Leasing Ltd

Net Sales and Net Profit Chart of Manappuram General Finance and Leasing Ltd on BSE.

The company charges about 15-25% interest on the loans and has a turnover of about Rs 8,000 crore. It claims to have non-performing assets(NPA’s) of only about 0.25%.

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