The gold loan company has fixed the price band for its upcoming IPO at Rs160-Rs175 and said the proceeds from the issue will improve its capital adequacy
Gold financing company Muthoot Finance plans to expand its presence in northeast Indian states, by setting up more branches there soon.
"We have around 1,700 branches in south India, while in north and west India we have about 450 and 250 branches respectively. To tap the growing opportunity in the northeast states, we will set up more branches there," George Muthoot, managing director, Muthoot Group, told at a news conference in Mumbai today.
As of 30th November 2010, over 75% of the company's gold loan portfolio was from Kerala, Karnataka, Tamil Nadu, Andhra Pradesh and Pondicherry. Muthoot Finance has 97 branches in the eastern states of the country.
Muthoot Finance, the largest gold loan company in India in terms of loan portfolio, will raise around Rs900 crore from its initial public offering (IPO) that opens on 18th April. The company has set a price band of Rs160-Rs175 a share for the planned sale of 5.15 crore equity shares. At the lower end of the price band, Muthoot Finance will raise Rs824 crore, while at the upper end it could fetch Rs901.25 crore.
The IPO will close on 20th April for qualified institutional buyers and on 21st April for retail and non-institutional investors.
"We will use the IPO funds to meet capital adequacy needs and working capital," said Oommen K Mammen, chief operating officer, Muthoot Finance Limited. "In our business we need a lot of cash and the IPO funds will help us to meet that need." The company's capital adequacy is currently below the 15% mark.
The public issue will constitute 13.85% of fully-diluted post issue paid-up equity share capital of the company. After the IPO the promoters will come down to 80% from the current 93%. Four financial investors-Matrix Partners, Baring PE Partners India, Kotak India PE and Wellcome Trust-own 7% stake.
Muthoot Finance gives both business and personal loans against gold ornaments and it has no plans to diversify its business. "We are in a growing market and we do not have any plans to diversify our business," said George Muthoot.
As of November 2010, the company holds 97 tonnes of gold. Non-performing assets are below 4%, Mr Mammen said.
The maximum tenure for a gold loan is one year, while the average tenure is three to six months. The current cost of borrowing is 9.5%. "The cost of borrowing currently is 9.5%, while we offer loans starting at 12% with a regulatory cap of 30% on the upper limit," Mr Mammen said.
HDFC Bank, ICICI Securities and Kotak Mahindra Capital Company are the book running lead managers for the Muthoot Finance public issue.
As per the takeover guidelines proposed by a SEBI panel headed by C Achuthan in July last year, an entity buying 25% stake in a company will need to make an open offer to the rest of the shareholders
New Delhi: Market regulator Securities and Exchange Board of India (SEBI) is likely to give its final view on the Takeover Code for merger and acquisition deals at its board meeting scheduled later this month, reports PTI.
"We are in consultation process. Probably we will get it (Takeover Code) through in the next board meeting," SEBI executive director Usha Narayanan told reporters on the sidelines of an Assocham event here.
As per the takeover guidelines proposed by a SEBI panel headed by C Achuthan in July last year, an entity buying 25% stake in a company will need to make an open offer to the rest of the shareholders.
Under the existing norms, the trigger point for making an open offer to shareholders was acquisition of 15% equity in the target company through market operations or through a negotiated deal.
SEBI had sought comments from various stakeholders on the Achuthan report.
"The two issues that got maximum feedback are relating to non-compete fee," Ms Narayanan said.
In his report, Mr Achuthan had recommended abolishing non-compete fees to be paid by acquirer to the promoter of the target company.
In mergers and acquisition deals, a non-compete fee is paid by the acquirer to the promoters of the target company for not entering the same trade, and such payments could be as high as up to 25% of the deal value.
If the report of the SEBI takeover panel is accepted by the regulator, the open offer would be available to all shareholders.
The proposed new norm of making an open offer for 100% stake would give all shareholders an opportunity to exit the company and get fair price for their equity stake.
At present, the open offer is for 20% of the share capital.
The Achuthan panel was set up in September 2009 with the aim to provide guidelines that will shape acquisitions in India for the next 5-10 years.
French firm Rhodia has completed the acquisition of the engineering plastics business of Rajasthan-based diversified firm PI Industries at an undisclosed amount
French firm Rhodia today said it has completed the acquisition of the engineering plastics business of Rajasthan-based diversified firm PI Industries at an undisclosed amount.
"We received an enthusiastic feedback from both PI Industries and Rhodia's customers and suppliers regarding this strategic move," Rhodia Engineering Plastics president Francois Hincker said.
"All our international partners in the region as well as domestic Indian players are fully confident in our ability to accelerate their growth through a rapid expansion of our activity," Hincker said.
This acquisition is a major step in Rhodia Engineering Plastics' growth ambition in India, aiming at doubling its local production capacities to represent 15% of Indian polyamide compound market by 2015, he said.
Rhodia plans to triple the capacity of PI Industries to 18,000-tonnes per annum from present 6,000-tonnes per annum by 2015.
"India has a huge growth of potential in plastics and we want to tap the opportunity. We are confident to grow with PI Industries in India," Hincker said.
The BSE-listed PI Industries operates three business units, agri inputs (manufacturing and distribution of agro chemicals-pesticides, insecticides and herbicides), custom synthesis (custom synthesis in the areas of fine chemicals, agro chemicals and pharmaceutical intermediates) and PI Polymer (engineering plastics compounding for end-use in automotive, electricals and home appliances).
On Wednesday, PI Industries ended 0.83% down at Rs725 on the Bombay Stock Exchange, while the benchmark Sensex increased 2.25% to 19,696.86.