InvestorQ : Is Manappuram planning to bring out a IPO for its microfinance arm?
Mary Joseph made post

Is Manappuram planning to bring out a IPO for its microfinance arm?

Arusha Ray answered.
1 year ago

Manappuram Finance is currently exploring the idea of hiving off its microfinance arm Asirvad Microfinance into a separate company and plan an IPO in the coming one year. There is official confirmation but it could be huge because Asirvad is already the fourth largest microfinance provider in India by asset size. Asirvad has a loan portfolio of Rs.5360 crore with over 25 lakh customers on its rolls.

In 2008, Asirvad Microfinance was taken over by Manappuram in February 2015 for a consideration of Rs.48.63 crore. Manappuram currently holds 95% in Asirvad with the original promoter holding the balance. Needless to say, the microfinance unit has grown exponentially under Manappuram. During this period, the loan book grew from Rs.300 crore to Rs.5,360 crore.

Already, for Manappuram, microfinance is the second biggest vertical after gold loans. Manappuram is targeting a P/BV of 3-4 times, while the valuation stands at just about 2% currently. Asirvad is also the most profitable business for the Manappuram group with cost of funds at 10% and net interest margin or NIM of 10%. The microfinance business is likely to close with profits of Rs.50 crore in FY21.

Asirvad has substantially digitised its operations and all customers are now on-boarded digitally. This helped Manappuram to reduce turnaround time for loans to under 5 days.