Muthoot Microfin Ltd

Muthoot Microfin raises USD 75 Million via External Commercial Borrowing

This milestone facility forms a crucial part of its diversification strategy, aligning with the Reserve Bank of India’s (RBI) heightened emphasis on diversifying NBFC’s funding sources.

About Fund Raising

Muthoot Microfin has announced a syndicated social term loan of USD 75 million in the form of an ECB (External Commercial Borrowing). The deal was participated by Standard Chartered Bank, Doha Bank, RakBank (National Bank of Ras Al Khaimah), Union Bank of India (UK) Ltd., and Canara Bank, GIFT City.

Standard Chartered Bank was the sole arranger of the funds and acted as the Social Loan Coordinator for the transaction, helping Muthoot Microfin put in place a Social Financing framework that carries a Second Party Opinion from S&P Global. The USD 75 million social loan facility has a greenshoe option of USD 25 million and the funds raised will be utilized for on-lending and financing of eligible social loans.

The loan has been tied up for a 3-year and 3-month tenor and benchmarked to a 3-month Term SOFR (Secured Overnight Financing Rate) with a margin of 2.85%, which will be serviced at a quarterly frequency. The facility is fully hedged for principal and interest without any forex risk to the company. Additional banks are expected to join later through the greenshoe portion.

Muthoot Microfin’s first large External Commercial Borrowing comes with a flexible drawdown option scheduled for the first quarter of the next financial year. This milestone facility forms a crucial part of its diversification strategy, aligning with the Reserve Bank of India’s (RBI) heightened emphasis on diversifying Non-Banking Financial Companies’ (NBFC) funding sources.

The long-term nature of this funding not only enhances the company’s Asset and Liability Management (ALM) position but also significantly reduces the cost of funds. Leveraging the Secured Overnight Financing Rate (SOFR) for funding ensures a cost advantage over domestic bank funding.

Company profile

Muthoot Microfin Ltd. is a part of Muthoot Pappachan Group (also known as Muthoot Blue) and is one of the leading listed MFIs in India. It provides financial assistance through microloans such as income-generating loans to women engaged in small businesses. It is involved in delivering financial services to the masses including underprivileged people, living in the rural sectors of Indian society at affordable terms.

Stock price movement

Today, the stock opened at Rs 202.65 and has touched a high and low of Rs 204.10 and Rs 198.80 respectively. The BSE group ‘B’ stock of face value of Rs 10 has a 52-week high and low of Rs 280.80 and Rs 196.10, respectively. Last week high and low of the scrip stood at Rs 209.55 and Rs 198.00 respectively. The current market cap of the company is Rs 3,406.43 crore.

The promoters holding in the company stood at 55.47% while Institutions and Non-Institutions held 29.39% and 14.14% respectively.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.

excellent analysis of the comany!!