Magma Fincorp to exit gold loan business

Magma Fincorp Ltd, a non-banking financial company (NBFC) backed by a clutch of private equity funds, has decided to exit its gold loan business, as per a stock market disclosure.

It did not give a reason, a time-line or the exit mode whether it would be through sale of asset or eventual exit by running down the loans.

As on March 31, 2014, the company had a total gold loan portfolio of Rs 98.2 crore or 0.87 per cent of its total assets.

Meanwhile, the company posted a net profit of Rs 42.43 crore for the second quarter ended September 30, 2014, an increase of 31 per cent from the corresponding period the previous fiscal.

Gross revenues was at Rs 580.62 crore, up 14 per cent, Magma said in a statement.

Loan book of the company increased 13 per cent year-on-year to Rs 18,836 crore as on September 30, 2014.

Magma is lending loans against trucks, farm equipment and to small businesses. It counts KKR, IFC and ChrysCapital as investors.

Other players in the gold loan business include Muthoot Finance and Manappuram Finance, both backed by PE investors.

(Edited by Joby Puthuparampil Johnson)

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