Muthoot Fincorp arm Muthoot Microfin has received a final observation letter from capital markets regulator Sebi to raise funds through IPO.
The company, in which Muthoot Fincorp holds a majority stake, refiled its draft IPO papers in July this year.
The company plans to raise Rs 1,350 crore through the public offer, which includes a fresh equity issue of Rs 950 crore and an offer for sale of Rs 400 crore.
The selling shareholders are Thomas Muthoot, Thomas John Muthoot, Thomas George Muthoot, Preethi John Muthoot, Remmy Thomas, and Nina George, who form a part of the promoter group. Besides them, Greater Specific Capital WIV will also be offering its shares.
In early 2018, the company had filed papers for an IPO and also received the market regulator’s approval. However, it did not go ahead and launch the public offer due to tough market conditions.
The microfinance firm aims to augment its capital base through the proceeds from the initial public offering.
As per the RBI regulations, microfinance institutions are required to maintain a minimum capital adequacy of 15% consisting of tier-I capital and tier-II capital.
As of March 2023 end, the company’s capital adequacy was 21.87%, of which, the tier-I capital base was 21.87%.
“Since our company continues to grow its loan portfolio and asset base, it will require additional capital in order to continue to meet applicable capital adequacy ratios with respect to its business,” Muthoot Microfin said in the draft prospectus.
Muthoot Microfin is the fourth largest microfinance company in India in terms of gross loan portfolio. It is the third largest in south India, with the largest in Kerala in terms of market share, and a key player in Tamil Nadu with an almost 16% share.
As of March 2023, its gross loan portfolio stood at Rs 9,200 crore, and it had 2.77 million active customers. For FY23, the company reported a revenue of Rs 1,430 crore and a profit of Rs 164 crore.
ICICI Securities, Axis Capital, JM Financial, and SBI Capital Markets are the book-running lead managers to the issue.
