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Muthoot Microfin Limited has recently announced a significant fundraising initiative that includes the issuance of non-convertible debentures (NCDs) and dollar-denominated bonds through private placement. This move, approved by the company’s Debenture Issue and Allotment Committee on September 3, 2025, aims to raise substantial capital to bolster its financial position and support ongoing business activities. Below is a detailed breakdown of this multi-faceted fundraising effort.
Key Highlights of the Fundraising Initiative
Muthoot Microfin plans to issue non-convertible debentures aggregating up to ₹150 crore in two tranches.
The company will also issue US Dollar-denominated bonds amounting to USD 15 million.
These instruments are secured, rated, listed, redeemable, and issued via private placement within the limits approved by the Board and shareholders.
The initiatives underscore the company’s strategic approach to capital management and financial stability.
Details of the US Dollar Bond Issuance
The company will issue up to 1,500 secured, rated, listed, redeemable bonds in USD.
Each bond carries a face value of USD 10,000, totaling USD 15 million in aggregate.
The bonds have a tenure of 36 months, with a deemed allotment date of September 15, 2025, and maturity scheduled for September 15, 2028.
Interest will be paid semi-annually based on a coupon rate linked to the 6 Month CME Term SOFR plus 275 basis points.
These bonds are secured by a first ranking exclusive charge via hypothecation over identified receivables and eligible portfolio loans, backed with a security cover of 1.05 times the outstanding principal and accrued interest.
The listing will be on the NSE IFSC Limited, enhancing liquidity and marketability for investors.
Non-Convertible Debentures (NCDs) Issuance Structure
The NCD issuance is divided into two major components totaling ₹150 crore.
First Tranche (₹50 Crore)
Up to 5,000 unsubordinated, secured, rated, listed, taxable, transferable, redeemable NCDs.
Each debenture has a face value of ₹1,00,000.
Tenure of 24 months with maturity on September 18, 2027.
Offers a fixed coupon interest rate of 9.80% per annum, paid monthly.
Secured by a first ranking exclusive charge on identified receivables with a coverage ratio of 1.1 times.
Second Tranche (₹100 Crore)
Up to 1,00,000 listed, rated, senior, secured, transferable, redeemable NCDs.
Each NCD bears a face value of ₹10,000.
Tenure for 24 months, maturing on September 12, 2027.
Carries the same annual coupon rate of 9.80%, with monthly interest payments.
Backed by a first ranking and exclusive charge over the company’s receivables, with a 1.1 times security cover.
Strategic Significance and Market Impact
This fundraising effort reflects Muthoot Microfin’s proactive capital management strategy, balancing foreign currency and domestic currency borrowings to optimize financial flexibility and currency risk exposure. The dollar bonds provide access to international capital markets, while the rupee-denominated NCDs cater to domestic investors, enhancing the company’s borrowing diversification.
The availability of rated, listed, and secured instruments indicates strong investor confidence and underscores Muthoot Microfin’s credibility and stable financial profile in the microfinance sector. The funds raised are expected to strengthen the company’s liquidity and support its ongoing lending and operational commitments, positioning it for sustainable growth amidst a competitive landscape.
Regulatory Compliance and Approval
The issuance complies with SEBI Master Circular on debenture issuance and related securities regulations.
The Debenture Issue and Allotment Committee has approved the issuance, consistent with prior sanctions from the Board of Directors and shareholders.
The strategic issuance follows the company’s adherence to robust disclosure and governance practices to maintain investor transparency.
Investor Outlook and Future Considerations
For investors, these offerings represent an opportunity to invest in a leading microfinance institution with secured and rated debt instruments promising attractive yields. The maturity timelines and coupon structures provide clarity on returns, while the secured nature of the instruments offers an additional layer of safety.
Muthoot Microfin’s readiness to tap multiple capital sources demonstrates its strong positioning and adaptability to financial market conditions. As these instruments get listed and traded, they will likely enhance the liquidity profile and investor base of the company’s debt securities, further consolidating its capital market presence.
Source: Moneycontrol, ScanX Trade
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