Manappuram Aims To Hive Off Microfinance Arm Asirvad, Take It Public
A woman shoots balloons, unseen, using an air gun on Marina Beach in Chennai. (Photographer: Sanjit Das/Bloomberg)

Manappuram Aims To Hive Off Microfinance Arm Asirvad, Take It Public

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Manappuram Finance Ltd., the second largest gold loan company in the country, is considering hiving off and taking its microfinance arm Asirvad Microfinance Ltd. public within a year, a top company official said.

With a loan portfolio of over Rs 5,360 crore and close to 25 lakh customers across 23 states, the Chennai-headquartered Asirvad is the fourth largest microfinance lender in the country in terms of the loan book.

Founded in 2008 by SV Raja Vaidyanathan, Asirvad was taken over by Manappuram in February 2015 for Rs 48.63 crore. The VP Nandakumar-led company first bought 71% stake which was later increased to 95% and the rest is with the founder Vaidyanathan.

Asirvad's Track Record

From a loan book of just Rs 300 crore and a few lakh customers across 115 branches in Tamil Nadu, Kerala and Karnataka when it was bought over, Asirvad has over 1,030 branches across 314 districts in 23 states (excluding Andhra Pradesh and Telangana) and a loan book of over Rs 5,358 crore as of 2020-end, of which over Rs 1,000 crore is in Tamil Nadu alone.

As of the December 2020 quarter, Asirvad had a loan book of Rs 5,357.71 crore, a growth of 6.68% from Rs 5,022.14 crore in the year-ago quarter.

This makes the microlending arm the biggest vertical after the gold loan business for the group.

"We are planning to hive off Asirvad within a year, and then take it public. We are looking at the right valuation. I am looking at a price to book value of 3-4 times, which is 2 times now," founder and Chief Executive of Manappuram Finance Group, VP Nandakumar told PTI.

"This is our most profitable business when it comes to return on investment at 20%. While my cost of fund is 10%, my net interest margin is 10%," he said, explaining the rationale for his higher valuation expectation.

Microlending business has a long future in the country as the poor still face difficulties in getting credit from banks, he said.

Nandakumar also said Asirvad will close the year to March 2021 with a profit of Rs 50 crore.

Asirvad's net profit had dipped to Rs 17.78 crore in the December quarter from Rs 71.21 crore a year ago, and it posted a net loss of Rs 2.42 crore in the June quarter due to the pandemic but it is expected to make a comeback and clock Rs 200 crore net income in the 2022 fiscal, he said.

Gold Loan, Housing Finance Businesses 

For his mainstay gold loan business under the Manappuram brand, Nandakumar expects 20% growth in net income this fiscal over the last financial year.

In the December quarter, its net income rose 17% to Rs 483 crore on an income of Rs 1,644 crore, up 14.5% year-on.

Consolidated assets under management grew 14.7% to Rs 27,642.5 crore. Of this, the gold loan stood at Rs 20,211.6 crore, up 24.43% from a year ago, while the aggregate gold loan disbursement was at Rs 57,445.14 crore.

Manappuram Home Finance has a loan book of Rs 633.44 crore, while the vehicles and equipment finance arm had an AUM of Rs 988.04 crore.

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