MUMBAI: The third largest gold loan player Muthoot FinCorp, a part of the Muthoot Pappachan Group, on Tuesday said it is looking at divesting up to 6 per cent of its promoter holding to raise about Rs 500 crore.
“As part of our aggressive expansion plan, wherein we will be adding nearly 1,000 more outlets by the end of the fiscal, we are looking at a private placement of 5-6 per cent of the promoters’ stake in Muthoot FinCorp, which would get us around Rs 500 crore,” Muthoot FinCorp Chairman and Managing Director Thomas John Muthoot told PTI here in an interaction.
He also said this will take the group closer to an eventual public issue. However, he did not give a time-frame for going public, as the present market conditions do not entice him to go for a public float. As of now, the promoters hold complete stake in the non-deposit taking NBFC.
The over Rs 20,000-crore Thiruvananthapuram-based Muthoot Pappachan Group is into gold, auto and home loans, apart from real estate, hospitality, power generation and IT. However, lending against gold is its core business, the book value of which now stands at Rs 6,500 crore.
As part of the expansion, the flagship brand will have 2,600 outlets by the end of March, up from 1,650 now, Muthoot said, adding altogether there are 2,853 branches under work now. To a question on the geographical spread of this expansion, Muthoot said “most of them will come up in the rural and semi-urban areas, primarily in Bengal, Orissa, Madhya Pradesh and Uttar Pradesh.”
Currently around 70 per cent of its 1,650 branches are located in its home state Kerala, he added.
On plan for the commercial banking space, as it holds a tad over 3 per cent in the trouble-stricken, Catholic Syrian Bank, Muthoot said, this is purely an investment as the shares are available very cheap in the open market. He also said the group has no plans to apply for a banking licence.
“We are good at what we are doing in the gold loan business. So,we don’t want to get into something very new. Our holdings in the CSB is purely for investment, as I think it is worth the value,” he said.
Muthoot admitted the cost of his funds has gone up in the recent past after the Reserve Bank recently asked banks not to classify loans to gold loan companies as priority sector lending.
“Following this our cost of funds have gone up by 1 to 1.5 percent, which will impact our margins too. At present, our margin is at 5 per cent,” he said.
In the hospitality business, it has four properties now, out of which three are functioning. While the a five-star deluxe Kovalam property is being managed by the Taj Group, the Thiruvananthapuram property in the five-star category is being managed by the Hilton Group.
It also has a five-star property coming up at Kakanad in Kochi, which will also be managed by the Taj Group, Muthoot said. The group also runs an MFI, called Mahila Mitre, which is primarily targeted at the lower income women, and has a loan book of Rs 103 crore.
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