Muthoot Pappachan Group’s microfinance subsidiary Muthoot Microfin Limited (MML) has secured a $10 million investment from UK-based Greater Pacific Capital (GPC). The private equity's stake in the MFI now stands at 16.6% compared to 14.4% earlier.
This is GPC's second investment into Muthoot Microfin, after it invested $50 million in the Mumbai-based MFI in December 2021.
Before this round, Chicago-based Creation Investments held a 9.8% stake in the company, while Trivandrum-based listed Muthoot Fincorp Ltd. and the Muthoot Pappachan Group family members owned the rest of the stake.
Muthoot Microfin plans to use this investment for its growth, expanding its operations to new geographies and further extending its services to rural households, it said in a statement.
“GPC’s second round of capital investment is a vote of confidence on the resilient performance of Muthoot Microfin and its growth opportunities,” Thomas John Muthoot, chairman of Muthoot Pappachan Group said.
“With the additional $10 million investment, the capital adequacy of MML would be 28%, which would help the company meet its immediate growth requirements,” he added.
Muthoot Microfinance provides micro loans to more than 2.3 million active borrowers. The company is focused on women entrepreneurs, primarily in the rural regions of India, according to a statement by the company.
With assets under management (AUM) of Rs 7,300 crore, the company has a network of 1,000 branches across 18 states and union territories in India. In FY22, the company had an operational revenue of Rs 8,32.5 crore, up 21.6% on a yearly basis. Its profit grew more than six times to Rs 47.4 crore during the same period.
“Post covid, Muthoot Microfin has seen a rapid growth in credit offtake. The portfolio originated post the second covid wave (after June 2021), accounting for 80% of the book as on September is behaving very well with just 0.16% non-performing assets,” said Thomas Muthoot, managing director of MML.
“Moreover, the profitability of business and asset quality is improving rapidly. MML is focusing on multiple digital initiatives to bring the operational expenses down. The additional investment will help us leverage on huge growth prospects ahead,” he added.
