Muthoot Fincorp plans IPO in 2-3 years

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At a time when its subsidiary Muthoot Microfin is readying for an initial public offering, parent company Muthoot Fincorp has also working on its own plans to raise equity from the market.

“We want to grow in SME lending, LAP and some other portfolios. We’ll build them gradually (before we come to the market). We’re learning, maybe in 2-3 years, we’ll be able to come to the market,” said Executive Director Thomas Muthoot.

“You can’t go (to the market) as a gold loan company. That lustre has gone from the market for pure gold loan players. We need to have a business model which will have a diversified portfolio,” he added.

The NBFC, which gives gold and small business loans, had a gold loan AUM of Rs 18,000 crore as of FY23. This has grown to around Rs 20,000 crore as of September and is expected to rise to around Rs 22,000-23,000 crore by the end of the current financial year, Muthoot said.

In addition to new customer acquisition, AUM growth will also be aided by an increase in the value of gold, he said, adding that gold loan AUM should grow at a CAGR of around 15 per cent over the next 2-3 years.

Gold loans currently account for 97 per cent of the lender’s overall loan portfolio, which the company hopes to bring down to about 65-70 per cent before it comes out with the IPO.

To support this growth, Muthoot Fincorp has entered into co-lending tie-ups with two PSU banks and is also looking to push the product through the recently launched Muthoot Fincorp One mobile application.

“We have launched our own digital platform Muthoot Fincorp One. We’re bringing lots of products into that. We have ‘Gold loan from home’, where we get the connect through the app and people call for gold loans and that’s a big business, which is done entirely through the application,” Muthoot said.

As such, the focus on MSME and other loan segments is also due to the increasing competition, especially from banks in Kerala and Tamil Nadu, in the gold loans segment. The focus will continue to be on acquisition of smaller customers, where the company has an average on-boarding of about 1 lakh borrowers per month.

In the MSME segment, the focus will be on largely supply chain finance to small businesses and traders and distributors, medical shops or cash-intensive businesses such as steel and cement merchants where the NBFC can track cash flows on an ongoing basis, Muthoot said.

Muthoot Fincorp has three subsidiaries — Muthoot Microfin, Muthoot Housing Finance and Muthoot Pappachan Technologies. The NBFC will look to deploy the proceeds from the upcoming IPO of Muthoot Microfin as reinvestment in other businesses, such as MSME lending and housing finance. For this, the NBFC might consider a rights issue following the IPO, Muthoot said.



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