Muthoot Microfin IPO opens on December 18 – Here's everything you need to know about the ₹960 Crore issue

Muthoot Microfin, backed by British private equity investor Greater Pacific Capital, has officially set December 18 as the launch date for its project ₹Initial Public Offering (IPO) worth 960 Crore. Interested investors have until December 20th to subscribe to the public issue. The price range details will be announced in the coming days.

The issue's anchor book will be published on December 15th.

The IPO includes a new issue of shares worth ₹760 crore from the microfinance institution coupled with an Offer for Sale (OFS) of ₹200 crore worth shares from existing shareholders.

The sellers in the OFS include promoters like Thomas John Muthoot, Thomas Muthoot, Thomas George Muthoot, Preethi John Muthoot, Remmy Thomas and Nina George who are selling together ₹150 crore worth shares. In addition, the investor Greater Pacific Capital WIV will separate ₹Shares in OFS worth 50 crore.

The corporate owners, which include Muthoot Microfin, own 69.08 percent of the shares, while the remaining 28.53 percent are in the hands of public shareholders. These shareholders include Greater Pacific Capital WIV with a 19.06 percent stake and investment management company Creation Investments India LLC with a 9.01 percent stake.

In addition, Muthoot Microfin has earmarked equity securities ₹10 crore for its employees who may have the opportunity to purchase these shares at a discounted price compared to the final issue price.

The net proceeds from the offering will be used primarily to strengthen the Company's capital base to ensure sufficient resources to meet future capital requirements.

Since the organization is classified as an NBFC-MFI, it is required to maintain a minimum capital to risk weighted asset ratio (CRAR) of 15 percent, which includes both Tier-I and Tier-II capital. In March FY23, the CRAR stood at 21.87 percent (equivalent to ₹1,363.8 crore) and in September FY24 it was 20.46 per cent (equivalent to ₹1,540.3 crore).

“The majority of the company's borrowers are unsecured and in order to protect the interests of the company's shareholders, a higher CRAR must be maintained,” Muthoot Microfin said in the Red Herring prospectus filed on December 11.

Muthoot Microfin will finalize the basis for allotment of the IPO shares by December 21, with allotment of shares to the demat accounts of eligible investors scheduled for December 22.

As per the IPO schedule, the company is scheduled to list its shares on both BSE and NSE on December 26. It is worth noting that markets and banks will be closed on December 25th due to the Christmas holidays.

The underwriters handling the issue include ICICI Securities, Axis Capital, JM Financial and SBI Capital Markets.

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