Manapurram Finance said on Thursday that its financial resources and management committee of the board of directors has approved issuance of private placement of rated, secured and redeemable non-convertible debentures having face value of Rs 10 lakh each for the amount of Rs 350 crore.
Manappuram is a non-bank finance company focusing on lending against gold across India. Its loan portfolio is heavily skewed toward loans against gold jewellery and ornaments (67 per cent) — bullions and coins are not allowed by regulation — supplemented by microfinance (20 per cent) and other lendings.
Last month, international credit rating agency S & P had assigned an issuer rating of BB minus long-term and B short-term with a stable outlook to the company’s proposed issue of debt instruments in the form of US dollar-denominated senior notes bonds by the establishment of a Euro medium-term note programme.
Indian finance companies face greater operating risk than banks because they usually have no access to central bank funding and have less onerous regulations — notwithstanding some regulations on capital adequacy, asset quality and asset-liability management.
Gold financing companies are subjected to additional regulations such as loan-to-value restrictions and higher capital for lending against gold.
About 40 per cent of the company’s lending against gold is conducted online. Similar to other finance companies in India, Manappuram is looking to capitalise on growth opportunities beyond its core competency.
These include insurance broking and microfinance as well as auto, affordable housing, and small and mid-size enterprise loans. The company is focused on servicing customers of similar socio-economic backgrounds who do not have readily available financing from other formal lenders.