Mumbai based micro-lender Muthoot Microfin, the microfinance arm of Pappachan Group (MPG), has secured $20m in private equity funding from Chicago based Creation Investments. The company proposes to open 500 more branches in three years. It will use the investment to spread mobile-based collection technology in rural areas.
The promoters will also infuse additional Rs 150 crore of capital which would be used to cater to bottom of the pyramid (BoP) clients and to expand business to newer geographies such as Bihar, Uttar Pradesh, Odisha, Chhattisgarh, Haryana and Punjab, in addition to the 10 states where it already operates. Of late, micro-lending companies have been under stress as the cash crunch following the government’s demonisation drive hit them hard. The company said MML uses hand-held devices to collect instalments and routs its payments via mPesa. The group has presence in various other sectors, including hospitality, automotive, realty, IT, healthcare, global services and alternate energy. Its non-banking financial company Muthoot Capital Services is a listed entity with a market capitalisation of Rs 320 crore and offers commercial and consumer finance products. Promoters own about 74% stake in the firm.