Muthoot Pappachan Group to sell 11% stake in MFI biz to US fund

Moneycontrol BureauMuthoot Pappachan Group to sell 11 percent stake in its microfinance business to Chicago-based PE fund Creation Investments, the company announced at a press meet today.Creation Investments will invest Rs 100 crore for a 9 percent stake in the Indian company, while it has the option of investing an additional Rs 30 crore by March 2018.Post subscribing to the Rs 30 crore option Creations will hold slightly over 11 percent stake in Muthoot Microfinance.Promoters of the microfinance company have also committed to infuse a total of Rs 150 crore in the company by March 2018.
Sadaf Sayeed, CEO, Muthoot Microfin said: "In the next 3 months we plan to disburse Rs 1,000 crore of loans to clients in a cashless manner." The company plans to open 500 branches in the next 3 years across the country in addition to the 166 branches now.

Muthoot Microfin aims to reach Rs 10,000 crore of AUM by March 2020 and plans to expand its client base from 1.3 million households to 4 million household in next 3 years.

Creation Investments has an option of exiting the stake through an initial public offer. The PE fund has valued the Muthoot Microfinance at over Rs 1,000 crore.Muthoot Group will utilise the proceeds of the sales to service BoP clients and to open branches in Bihar, Uttar Pradesh, Odisha, Chhattisgarh, Haryana & Punjab.Currently, the overall microfinance customer base is at 13 lakh and the company has provided loans to over 4 lakh households in FY17 till December 2016.      Muthoot Pappachan Group is a diversified financial conglomerate in a slew of sectors spanning across hospitality, automotive, realty, IT services, healthcare.