Muthoot Finance to raise Rs 500 crore debt, goes slow on lending

http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/muthoot-finance-to-raise-rs-500-crore-debt-goes-slow-on-lending/articleshow/16355103.cms

The country's largest gold loan player Muthoot Finance, which is aiming to raise up to Rs 500 crore debt, today said it has gone slow on asset acquisition this year as a result of regulatory concerns over the lending-against-gold model.

"This is a year of consolidation for us. Our assets under management have de-grown by 6 per cent and stand at Rs 23,300 crore now from the March figure of Rs 24,400 crore," managing director George Alexander Muthoot told PTI here.

He, however, said the company expects to cover up the lost ground in the remaining period of the fiscal, and close with a 10 per cent growth for the entire fiscal once regulatory clarity comes in.

Muthoot refuted suggestions of systemic risk to the sector.

The company has also gone slow on its network expansion and will be opening only 200 branches this fiscal as against the 900 each it had opened in the past two fiscals.

However, he said, in spite of the consolidation its margins continue to be unaffected and the company will end the year with the net interest margin at the 9-9.5 per cent levels.

Muthoot Finance today announced the launch of Rs 250 crore non-convertible debenture issue, with a green shoe option to retain over-subscriptions of an equal amount.

The issue, which is open between September 17 and October 5, offers an effective yield of up to 12.40 per cent.

Investors will be having five options to choose from and minimum subscriptions will have to be for 10 debentures having the face value of Rs 1,000 each.

The funds raised will be used for lending and investments, to repay existing liabilities or loans, and towards business operations including capital expenditure, working capital requirement and other general corporate purposes, the company said.