After public issue, Muthoot Finance plans Rs 1,000-cr NCDs

MUMBAI: Muthoot Finance plans to raise Rs 1,000 crore through retail non-convertible debentures , said i-banking officials. “The company is expected to raise funds by end of July. It is in talks with ICICI Securities and Kotak Mahindra Capital for execution of the same,” the officials said. Muthoot Finance, India’s largest gold loan firm, raised Rs 900 crore through an initial public offering about two months ago.

“The objective of the issue is to further diversify our sources of funding. This will give fillip to our growth in gold loan business. This will provide longterm stable funding and maintain cost of funds at reasonable levels especially in the present scenario of hardening interest rates,” George Alexander Muthoot, MD, Muthoot Finance, told ET.

The NCD issue will give an opportunity to retail investors to lock funds for long term at attractive rate of interest, he said. “The secured NCD issue is expected to bear a coupon of anywhere around 11.5-12 % with a tenure of 2-5 years. We will be able to pass on the increased rates to the borrower as the ticket size is low and service quality is given more weight by the borrower.”

Muthoot has long-term rating of AA- / stable from Crisil and LAA- /stable from ICRA. NCDs are a type of debt instrument that are issued for fixed maturity and cannot be converted to equity. Typical redemption period range from 3-5 years and it can be issued to retail and institutional investors like banks, insurance companies, corporate treasuries and provident fund trusts.