Muthoot Microfin Raises INR 75 Cr Via Market-Linked Debentures
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Muthoot Microfin Limited, the microfinance arm of Trivandrum-based Muthoot Pappachan Group, on Thursday declared that the company has raised INR 75 crore through the issuance of market-linked debentures (MLD) in June. The market-linked debentures, which were issued on a private placement basis, are slated to mature in 18 months.
“The idea is to diversify the sources of funding for Muthoot Microfin, we plan to raise INR 500-600 crore this FY through MLD. These funds will be utilized for disbursements to microfinance clients. We are expecting a rebound in the rural economy post the pandemic woes and we are well equipped to service the sector with ample funds, operational reach, and adequate resources. We also plan to close our $50 million equity fundraising very soon,” Muthoot Microfin Limited chief executive officer Sadaf Sayeed, while talking about the road ahead with regard to the market-linked debentures.
Notably, the Principal Protected Market Linked Debentures (PP-MLD) are listed in the Bombay Stock Exchange and rated A/Stable by the Credit Rating Information Services of India Limited (CRISIL). The rating implies a high degree of safety regarding timely servicing of financial obligations and low credit risk of the instrument.
According to Muthoot Microfin Limited chief financial officer Praveen T, “We are quite comfortable with our liquidity position, we are expanding the sources of funds beyond traditional venues like Term Loans or Direct assignments. We have issued several NCDs in the past; with MLDs, we were able to raise funds at very competitive rates. Current MLD is listed at 10.25 per cent and going forward we expect this cost to go down by 50 – 75 bps”
Muthoot Microfin Limited is present in 17 states with a network of 773 branches. With around 1.8 million active borrowers, the company works towards uplifting women entrepreneurs based in rural parts of the country.