Mumbai: Manappuram General Finance and Leasing Ltd is in talks with leading private equity (PE) funds such as Advent International Corp. and New Silk Route Advisors Pvt. Ltd for a third round of funding, a top official told Mint in an interview.
“These are exploratory talks. The actual investment will happen post-merger,” said V.P. Nandakumar, chairman and chief executive officer of Kerala-based Manappuram General Finance, adding that the firm is planning to raise up to Rs300 crore. The stand-alone firm’s current market capitalization is Rs670 crore.
According to Nandakumar, Advent is keen on linking the investment to a board seat in the company, but that Manappuram has “constraints”.
Darius Pandole, partner at New Silk Route, declined to comment.
Advent did not respond to a Tuesday email.
“Our board is full capacity,” he said, adding that more PE investors on the board would mean having to increase the number of independent directors. During its previous two rounds of fund-raising in 2007 and 2008, the company had offered a board seat each to Sequoia Capital India Investment Holdings and to India Equity Partners. “This may not be possible in this round,” Nandakumar said.
The company is looking to raise the funds in the last quarter of fiscal 2009-10. According to Nandakumar, the PE funds have shown “keen interest”, in the company which he prefers to call a microcredit organization as it uses household gold jewellery for micro-credit. Manappuram’s average size for loans against gold is Rs25,000 with an average tenure of three months to an year.
Mannapuram had profits of Rs14.25 crore for the June quarter, compared with Rs6 crore in the same quarter last year, a 137% increase.
Manappuram, India’s only listed gold loan non-banking finance company, is currently in the process of merging itself with Manappuram Finance Tamilnadu Ltd, a group company in the southern Indian state of Tamil Nadu. The two together have 770 branches. The merger, which will take promoters’ equity stake from 33% to 46%, is expected to be completed by December.
Nandakumar took Manappuram General Finance public on the Bombay Stock Exchange in 1995. In 2007 and 2008, he raised Rs70 crore and Rs108 crore, respectively, from PE investors.
Sequoia Capital and Hudson Equity Holdings Ltd were among the funds that invested in Manappuram General Finance in the first two rounds. In December 2007, Sequoia Capital and India Equity Partners invested Rs35 crore each in two tranches to fund expansion plans.