Non-banking finance company Muthoot Finance Ltd, which is backed by investors like Baring Private Equity Partners India and Matrix Partners India, has set a price band of Rs 160-Rs 175 for its public issue that will allow it to raise up to Rs 900 crore, possibly valuing it at Rs 6,500 crore or $1.46 billion. Muthoot intends to use the issue proceeds to augment its capital base and meet future capital requirements for funding of loans.
The Kerala-based NBFC had raised around Rs 255 crore from four financial investors through pre-IPO transactions in July-September last year. While Matrix Partners put in Rs 104 crore ($23.4 million), Baring PE Partners India brought in Rs 78 crore ($17.5 million), Kotak India PE, along with Kotak Investment Advisors, pumped in Rs 42.5 crore ($9.5 million) and UK’s Wellcome Trust invested Rs 30.5 crore ($6.8 million).
At the upper end of the price band, Matrix Partners and Kotak PE would be sitting on unrealised gains of 31.5 per cent on their less-than-a-year-old investment while Baring PE Partners India would count book profits of 42.2 per cent and Wellcome Trust would just make up for its investment cost.
Wellcome Trust is also expected to bring in another Rs 55 crore to buy more shares of the company ahead of the IPO. This will be part of another pre-IPO sale of shares up to 14.1 million, at a price not less than Rs 123.
Muthoot Finance, which claims to be the largest gold loan company in India in terms of loan portfolio, provides personal and business loans secured by gold jewellery. It primarily caters to individuals who possess gold jewellery but cannot access formal credit within a reasonable time or to whom credit may not be available at all. These loans help meet their short-term liquidity requirements.
As of August 31, 2010, its network stood at 1,921 branches across India employing 12,220 persons. The gold loan business was started by M George Muthoot in 1939 under the group’s trading business of Gold Loans. In addition to gold loans, it also provides money transfer services through its branches as sub-agents of various registered money transfer agencies, and has recently started collection agency services. The firm also operates three windmills in Tamil Nadu.
Its total income for the year ended March, 2010, was Rs 1,089.37 crore with a net profit of Rs 227.57 crore. Its net worth has grown from Rs 213.1 crore (as of March 31, 2008) to Rs 584.2 crore for the year ended March, 2010.