Gold Loan Firm Manappuram Bounces Back, Sequoia Ups Stake

08 February, 2012

The share price of gold loan retailer Manappuram Finance Ltd rebounded as the management clarified on the circular passed by the Reserve Bank of India (RBI) warning  it against accepting any public deposits. The company’s share price rose over 8 per cent on Wednesday on BSE after crashing 20 per cent the previous day.

The management has said that the RBI order will not have impact on the balance sheet and profit & loss statement of Manappuram Finance.

The share price of Manappuram closed at Rs 49.3, up by 8.35 per cent on the BSE on Wednesday.

Manappuram is backed by a host private equity firms including Sequoia Capital India, India Equity Partners, Baring Private Equity India, Granite Hill and Ashmore Alchemy.

Manappuram said that it is “accepting investments through secured Non-Convertible Debentures (NCDs) and subordinated bonds which do not fall under the definition of public deposits.” Earlier called Manappuram General Finance and Leasing Ltd, it was registered as a deposit taking NBFC but was converted into a non-deposit taking NBFC in March 2011 by RBI.

RBI said on Monday that acceptance of deposits either by Manappuram Finance or by Manappuram Agro Farms (MAGRO) is punishable with imprisonment and those who deposit money with them do it at their own risk.

“It has come to the notice of the Reserve Bank that Manappuram Finance Limited has been accepting deposits from the public in its branches and offices has been issuing deposit receipts in the name of Manappuram Agro Farms, a sole proprietary concern of Shri V P Nandakumar who is the Executive Chairman of the company. It is further observed that in some cases instead of repaying the matured deposits, fixed deposit receipts are being issued in the name of MAGRO,” the RBI statement added.

A report quoting a statement from Nandakumar said that Manappuram Agro, which operates from Manappuram Finance premises, is now repaying the deposits.

The board of Manappuram is expected to meet on February 10 to discuss the RBI release. “The board will also discuss measures to be taken to further improve the corporate governance of the company,” it added.

For Q2FY12, Manappuram had reported a 107 per cent year-on-year increase in net operating income to Rs 371 crore with profit after tax also shooting up 125 per cent to Rs 60 crore for the same period.

Ashmore Alchemy Cuts More Stake; Sequoia Ups Holding

Ashmore Alchemy India, a joint venture between Alchemy Partners LLP and Ashmore Investments (UK), has continued its exit process from Manappuram during the October-December quarter by selling 0.65 per cent stake for Rs 35.1 crore. AA Development Capital India Fund I LLC, the entity through which Ashmore Alchemy holds the stake, sold its stake when shares were trading in the Rs 63-65 bracket.

Ashmore Alchemy currently holds 3.59 per cent stake in Manappuram, which is worth nearly Rs 150 crore. The firm had invested Rs 22.4 crore in the company through compulsorily convertible preference shares in 2008.

Sequoia Capital holds 2.11 per cent stake, up from 1.55 per cent as of September 2011. Other investors are India Equity Partners (8.54 per cent) and Baring India Pvt Equity Fund III (1.38 per cent).


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Gold Loan Firm Manappuram Bounces Back, Sequoia Ups Stake

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