Muthoot Finance is seeking to raise a sum of around Rs 1400 crores as it plans to issue Non-ConvertibleDebentures starting tomorrow, the 17th. NCDs are unsecured bonds that cannot be converted into either company equity or stock. Muthoot Finance is said to be the largest gold financing company in the world. Each of the debentures will havea face value of Rs 1,000 each, totalling Rs 1,300 crores. Besides these, unsecured NCDs of Rs 1,000 each aggregating Rs 100 crores will also be released, pushing up the total investment to Rs 1,400 crore.
Muthoot Finance has stated that these funds will be used to expand the lending activities of the company. In a statement, The MD of Muthoot Finance George Alexander Muthoot was quoted here as saying,”This is the first public issue by the company after rating upgrade by CRISIL and ICRA. Given the current liquidity condition and low-interest rates on bank deposits, the rate of interest offered in current issue will be an attractive investment option for retail investors.The tranche issue is with a base issue size of Rs 200 crore with an option to retain over-subscription up to shelf limit of Rs 1,400 crore.”
The company has confirmed that it will offer 10 investment options for the secured NCDs with monthly or annual interest payment or on maturity with an effective yield which ranges from 8.25 to 9.25 per cent for retail investors. The investment options for the unsecured NCDs is a scheme which is said to double the invested amount within a span of 4 years and yields a very tempting 9.06% interest for would-be retail investors. Both CRISIL and the ICRA, which provides investment information and credit rating services in India, have rated the long-term debt rating of ‘AA’ or stable for the debentures proffered under the issue. The offering will close on 17 February, a month later.
Muthoot Finance’s headquarters are located in Kerala and it operates over 4,400 branches throughout the country. The group is also established in the UK, the US, and the UAE. The target market of Muthoot Finance includes small businesses, vendors, farmers, traders, SME business owners and salaried individuals. It is classified by the Reserve Bank of India as a Non-Banking Financial Company or an NBFC.