Kerala-based gold loan company Manappuram Finance is looking at acquiring a housing finance company (HFC) to enter the affordable housing business, officials of the company said. The gold loan company has hired merchant bankers to scout for potential acquisition targets.
“We are looking at diversifying into secured lending and we will look at all business opportunities in that area,” said I Unnikrishnan, executive director and deputy chief executive officer, Manappuram Finance.
According to senior officials, the housing finance business will take six months to set up and will require a capital infusion of R100-150 crore. Smaller non-banking finance companies (NBFCs) in the home loan business will prove to be good acquisition targets, the officials confirmed. The company’s stock closed at R16.10 per share on the BSE on Thursday, up 6.98% from the previous close on news of the acquisition.
Under the plan to diversify its business, Manappuram Finance is also planning to start small business lending, apart from gold loans. The company plans on giving out secured loans of up to R15 lakh to small business owners and plans to expand this business in select geographies. The business will be up and running in three months, the company said.
“Thirty per cent of the customers who come to us for gold loans are small business owners. So our initial target will be to tap our own customer base,” Unnikrishnan said while announcing the company’s plan to raise R200 crore through secured non-convertible debenture (NCD) issue.
Manappuram Finance’s R100-crore NCD issue has an option to retain over-subscription up to R100 crore, for a tenure ranging from 400 days to 70 months, the company said. The NCDs will have an effective yield of up to 12.61% per annum.
The issue which has been rated A+ with a negative outlook on business, will remain open between December 30 to January 20, with an option of early closure. The debentures will be listed on the Bombay Stock Exchange, the company said in a statement.
Manappuram has a branch network of 3,293 branches across 26 states, with assets under management worth R9,202 crore as on September 30.