By 06 May, 2011

India’s largest gold loan company Muthoot Finance closed just a tad higher than its issue price after a modest listing gain on Friday. The scrip that opened 2.8 per cent above its issue price of Rs 175 on its debut at the BSE in a firm Mumbai market on Friday, hit a high of Rs 198 before dropping below the issue price to Rs 161 and ended the day at Rs 176, just 0.7 per cent higher than its issue price, valuing the company at Rs 6,551 crore or $ 1.46 billion.

At the other stock exchange NSE, Muthoot had a better opening, providing listing gain of 12.3 per cent. But it last traded at Rs 172.6 or 1.3 per cent below the issue price.

The not-so-great debut of Muthoot also had some impact on one of its key competitors in the market, Manappuram General Finance. Manappuram scrip was down 4 per cent during the day.

This can be partly due to softening of bullion prices over the past few trading sessions. While silver has gone into a sharp correction mode after an unsustainable fast-paced rise, gold is also trading below $1,500-an-ounce mark.

Muthoot, backed by big investors including the world’s largest sovereign wealth fund Abu Dhabi Investment Authority, besides private equity firms such as Matrix Partners, Kotak Private Equity and Baring India Private Equity Fund, had a blockbuster issue having been oversubscribed 24 times.

This was led by the strong demand from institutional investors and HNIs, even as retail investors also fully subscribed to shares which were reserved for them. The strong response from investors makes it one of the best primary market issues to hit the local market in recent times, in terms of oversubscription figures. Muthoot intends to use the issue proceeds to augment its capital base and meet future capital requirements for funding of loans. (Read earlier ).

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