V.P. Nandakumar in Calcutta on Friday. Picture by Kishor Roy Chowdhury
Calcutta, March 7: Gold loan company Manappuram Finance is looking to diversify into housing finance.
The Kerala-based non-banking finance company (NBFC), which is also engaged in money transfer and currency exchange, is planning to expand in the housing segment through an acquisition.
“Gold loan constitutes the majority of our business. We are now looking to diversify into housing finance through the inorganic route,” said V.P. Nandakumar, managing director and chief executive officer of Manappuram Finance, on the sidelines of a seminar on corporate governance in financial institutions organised by the Indian Chamber of Commerce.
He said the target company to be acquired had been identified, and approvals from regulators such as the National Housing Board, the Reserve Bank of India and Sebi were expected within six months.
Although Nandakumar did not reveal the size of the acquisition, he said funds would not be an issue. “We are adequately capitalised. Further, with our debt-equity ratio, there is an ample scope of leverage. Also we have adequate banking lines.”
The NBFC had a capital adequacy ratio of 28.28 per cent in the third quarter ended December against the regulatory requirement of 15 per cent.
The company has recently announced the public issue of non-convertible debentures, aggregating Rs 100 crore.
Nandakumar said the company would look to leverage its customer base of about 1.6 million to grow in housing finance. “In five years, the housing finance business could reach Rs 300 crore.”
According to market observers, demographic changes such as urbanisation and the rise in income have fuelled the sustained demand of housing finance.
Moreover, as corporate lending is under stress because of the weak macroeconomic conditions, most commercial banks and other financial institutions are increasingly looking at lending to this sector.