Muthoot Finance to acquire IDBI AMC for Rs215 cr

Manappuram set to enter Credit Life Insurance business

KOCHI: Kerala’s leading gold loan NBFCs, Muthoot Finance and Manappuram Finance are cashing in on their long standing and wide reach in the market, thanks to their decades-old gold loan business.

They are now spreading their wings into newer business areas with Muthoot having announced on Friday its plan to acquire 100 per cent interest in IDBI Asset Management Company and IDBI MF Trustee Company for Rs215 crore from IDBI Bank and its group companies.

Recently, Manappuram Finance had announced its plan to enter credit life insurance business after acquiring enough expertise in selling insurance products on behalf of third parties for a pretty long period. Credit life insurance has a growing demand in the market especially from the lenders extending loans to joint borrowers.

Muthoot Finance has recently opened shop in the United States through partnership with non-resident Indians there, whereby the Muthoot Group will hold a major stake, maybe up to 70 per cent.

Though gold loan is the mainstay for Muthoot and Manappuram, both companies have already established their presence in other financing areas such as auto loan, home finance, personal loan and microfinance even as more and more banks are eating into their ‘bread and butter’ – gold loan business, with the Kerala-based CSB Bank and South Indian Bank (SIB) having already made strong presence in this area.

Both Muthoot and Manappuram have commenced raising funds from overseas markets presumably to create a backstop in anticipation of a likely trend of bank finance, their biggest fund source, getting scarcer for NBFCs in the future in the new scenario.

Muthoot has already raised $450 million from overseas market at a pricing little over 6 per cent as part of its ambitious $1 billion fund raising programme, whereas Manappuram’s board has given its green signal for a $750 million euro medium term note (EMTN) programme and the company deciding to hit market by November end or December first week with a $300 million tranche.

Muthoot’s IDBI AMC acquisition deal, which is subject to necessary regulatory approvals including markets regulator Sebi, is expected to be completed by February-end 2020, Muthoot Finance said in a statement on Friday

Promoted by IDBI Bank in 2010, IDBI Mutual Fund is one of the profit making AMCs in the market with an asset under management (AUM) of over Rs5,300 crore.

Muthoot Finance currently serves about 2 lakh plus retail customers every day for gold loans and other products and has the same number of retail investor base for its non-convertible debentures (NCDs). The company has a Pan India presence through 4,500 + branches.

Muthoot said it plans to utilise the group’s existing branch network, customer outreach and brand visibility in further strengthening the mutual fund asset base of the target entities and bringing a novel customer experience with focus on Tier 2 and 3 cities.


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