Gold loan financier Manappuram Finance Ltd plans to raise up to $250 million through offshore bonds as it joins other non-banking financial companies (NBFCs) in tapping overseas markets to raise debt at a time when domestic liquidity for the sector is constrained.
Manappuram mainly provides loans against gold jewellery, along with short-term personal and business gold loans to retail customers. Its other lines of business include vehicle and equipment finance, loans to small and medium businesses and fee-based services such as forex and money transfer.
The lender has already concluded investor road shows and the bond issue could be launched within a week, according to two people aware of the company’s plans.
“The first tranche of the planned US-dollar bond issuance is expected to close within a week. Manappuram aims to raise $200-250 million. UBS India is advising the gold loan financier on the capital raise," said one of the two persons mentioned above, requesting anonymity.
The bonds have a three-year tenure with bullet repayment on maturity, he said.
“Like several other NBFCs this year, Manappuram also aims to diversify its sources of capital and is thus tapping overseas debt markets," according to the second person mentioned above, who also requested anonymity.
On 27 November, Thrissur-based Manappuram informed exchanges that its board has approved a plan to undertake the issue of foreign currency denominated bonds under a Euro medium term note programme through which the NBFC would raise up to $750 million in one or more tranches.
Emails sent to Manappuram Finance did not elicit a response, while UBS chose not to comment.
Several domestic NBFCs have opted to explore the feasibility of raising debt overseas after defaults at Infrastructure Leasing and Financial Services Ltd in September 2018 caused a severe liquidity crunch in the non-bank lending sector.
Last month, gold loan financier Muthoot Finance Ltd said it has raised $450 million through its maiden offshore bond issue from investors across the US, Asia, and Europe.
Earlier in February, commercial vehicle financier Shriram Transport Finance Co. Ltd raised $400 million through its maiden offshore bond issuance.
In the quarter ended 30 September, Manappuram reported an 82% jump in its consolidated profit to ₹402.28 crore, compared to the corresponding period a year ago. Its total assets under management (AUM) grew by 31.91% to ₹22,676.93 crore during the period, while its gold loan AUM rose 20.45% to ₹15,168.34 crore, from the same quarter last year.