Muthoot Microfin IPO to open on December 18 — Here’s all you need to know about ₹960 crore issue

Muthoot Microfin, backed by UK-based private equity investor Greater Pacific Capital, has officially set December 18 as the commencement date for its ₹960-crore initial public offering (IPO). Interested investors have until December 20 to subscribe to the public issue. The details regarding the price band will be disclosed in the coming days.

The anchor book of the issue will be held on December 15.

The IPO comprises a fresh release of shares valued at ₹760 crore by the microfinance institution, coupled with an offer-for-sale (OFS) of ₹200 crore worth of shares by existing shareholders.

Among the sellers in the OFS are promoters such as Thomas John Muthoot, Thomas Muthoot, Thomas George Muthoot, Preethi John Muthoot, Remmy Thomas, and Nina George, collectively divesting ₹150 crore worth of shares. Additionally, investor Greater Pacific Capital WIV will be divesting ₹50 crore worth of shares in the OFS.

Company promoters, which include Muthoot Microfin, maintain a 69.08 percent ownership stake, while the remaining 28.53 percent is in the hands of public shareholders. Among these shareholders are Greater Pacific Capital WIV, holding a 19.06 percent stake, and investment management firm Creation Investments India LLC, with a 9.01 percent stake.

Additionally, Muthoot Microfin has earmarked shares worth ₹10 crore for its employees, who may have the opportunity to acquire these shares at a discounted rate compared to the final issue price.

The net issue proceeds from the offering will primarily be allocated to bolstering its capital base, ensuring sufficient resources to meet future capital demands.

Being categorized as an NBFC-MFI, the organization is mandated to uphold a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15 percent, encompassing both Tier I and Tier II capital. As of March FY23, its CRAR registered at 21.87 percent (amounting to ₹1,363.8 crore), and as of September FY24, it was at 20.46 percent (equivalent to ₹1,540.3 crore).

"Majority of the borrowers of the company are unsecured and to protect the interests of shareholders of the company, a higher CRAR is required to be maintained," Muthoot Microfin said in the red herring prospectus filed on December 11.

Muthoot Microfin will finalise the basis of IPO share allotment by December 21, with the allocation of equity shares to eligible investors' demat accounts scheduled for December 22.

Following the IPO schedule, the company is slated to list its equity shares on both the BSE and NSE on December 26. It's worth noting that markets and banks will observe closure on December 25 in observance of the Christmas holiday.

The book-running lead managers overseeing the issue include ICICI Securities, Axis Capital, JM Financial, and SBI Capital Markets.