Muthoot Microfin Limited Raises USD 75 Million via ECB
- The deal was solely arranged by Standard Chartered Bank (also acting as Social Loan Coordinator)
- Standard Chartered Bank, Doha Bank, National Bank of Ras Al Khaimah, Union Bank of India (UK) and Canara Bank participated in the fundraise
KOCHI, MARCH 28, 2024 (TGN): Muthoot Microfin Limited (NSE: MUTHOOTMF, BSE: 544055), a leading Indian microfinance institution, has announced a syndicated social term loan of USD 75 million in the form of an ECB (External Commercial Borrowing). The deal was participated by Standard Chartered Bank, Doha Bank, RakBank (National Bank of Ras Al Khaimah), Union Bank of India (UK) Ltd., and Canara Bank, GIFT City.
Standard Chartered Bank was the sole arranger of the funds and acted as the Social Loan Coordinator for the transaction – helping Muthoot Microfin put in place a Social Financing framework which carries a Second Party Opinion from S&P Global. The USD 75 mn social loan facility has a greenshoe option of USD 25 million and the funds raised will be utilized for on-lending and financing of eligible social loans.
The loan has been tied up for a 3 years and 3 months tenor and benchmarked to a 3-month Term SOFR (Secured Overnight Financing Rate) with a margin of 2.85%, which will be serviced at a quarterly frequency. The facility is fully hedged for principal and interest without any forex risk to the company. Additional banks are expected to join later through the greenshoe portion.
Muthoot Microfin Limited’s first large External Commercial Borrowing comes with a flexible drawdown option scheduled for the first quarter of the next financial year. This milestone facility forms a crucial part of its diversification strategy, aligning with the Reserve Bank of India’s (RBI) heightened emphasis on diversifying Non-Banking Financial Companies’ (NBFC) funding sources.
The long-term nature of this funding not only enhances the company’s Asset and Liability Management (ALM) position but also significantly reduces the cost of fund. Leveraging the Secured Overnight Financing Rate (SOFR) for funding ensures a cost advantage over domestic bank funding.
Speaking on the fundraise, Mr. Sadaf Sayeed, CEO, Muthoot Microfin Limited, said, “We are proud to announce this ECB and are grateful to all the participants for their positive response. This development enables us to not only diversify our source of funds but also create and sustain an attractive position in the international market. The ECB will further our business objectives as we plan to utilise the fund towards facilitating microfinance loans across geographies. This strategic move not only opens avenues for international partnerships but also introduces the MFI sector to diverse international banking entities across different geographies.”
About Muthoot Microfin Limited:
Muthoot Microfin Ltd. is a part of Muthoot Pappachan Group (also known as Muthoot Blue) and is one of the leading listed MFIs in India. It has inherited values, principles of integrity, collaboration, and excellence to take forward the legacy of 137 years. The microfinance operations of the Company are designed to promote entrepreneurship among women and inclusive growth. It provides financial assistance through micro loans such as income generating loans to women engaged in small businesses. It is involved in delivering financial services to masses including underprivileged and disadvantaged people, living in the rural sectors of the Indian society at affordable terms, in quick turnaround time and with hassle-free processing is the aim of our financial inclusion drive. As on 31st December 2023, the Company has 3.27 million active customers served through 1,424 branches spread across 18 states and 346 districts with a Gross Loan Portfolio (GLP) of 11,458 Cr. It is also part of S&P BSE Financial Services Index.
Caution Concerning Forward- Looking Statements:
This document includes certain forward-looking statements. These statements are based on management’s current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive, technological and/or regulatory factors. The Company is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.Ends/TGN