International Finance Corporation plans to make a debt investment of up to Rs 540 crore ($75 million) in Manappuram Finance Ltd, in what will be its first funding for a gold loan-focussed company globally.
The proposed funding will be through three-year senior, secured debt, the World Bank's private-sector investment arm said in a disclosure. IFC’s board will discuss the investment proposal on 20 March.
IFC said it plans to earmark $30 million for Kerala and $45 million for low-income states. Manappuram will use the debt funding to extend loans in Kerala after the state recorded one of its worst floods last year, and for utilisation in low-income states. The non-bank lender will use the money to provide gold loans to micro, small and medium enterprises.
Mumbai-listed Manappuram Finance is promoted by VP Nandakumar, who controls a 35.2% stake in the lender. Baring India Private Equity holds an 8.8% stake in the company while Apax Partners, via Quinag Acquisition, owns 9.9% and Fidelity Investment Trust 3.4%.
Baring PE India had first invested in Manappuram in late 2011 and later increased its stake. Apax first invested in the lender in 2017 and increased its stake last year.
Thrissur, Kerala-based Manappuram has 4,314 branches across 28 states in the country. Its assets under management (AUM) stood at Rs 17,783.1 crore as on 31 December 2018. The gold loan AUM was Rs 12,524.91 crore.
The lender’s consolidated income from operations stood at Rs 3,031.46 crore for the nine months through December 2018, up from Rs 2,534 crore a year earlier. The profit after tax improved to Rs 664.28 crore from Rs 497.35 crore.
Apart from providing debt financing, IFC also makes direct private equity-style investments. It also backs private equity and venture capital funds.
Earlier this month, IFC proposed to invest up to $8 million (about Rs 57 crore) in online lending platform Mintifi. In November 2018, IFC had proposed to invest in small finance banks Suryoday and Ujjivan.