Golden opportunity for Muthoot Baring and Matrix India buy stake AZB and Luthra advice

India’s largest gold loan company, Muthoot Finance Limited (Muthoot) has been successful in raising Rs. 157 crore ($35 million) in its first institutional round of fund raising from Baring Private Equity Partners India (Baring) and Matrix Partners India (Matrix) for a 4 percent stake in the company..The Kerala based NBFC has a loan book of around Rs. 9,000 crore ($1.9 billion) and has over 1,800 branches across the country. According to the Economic Times, both the private equity firms will now have a 2 percent stake each in the company, which is valued at $1 billion (Rs. 4,600 crore) in terms of the present deal..The Bangalore office of AZB & Partners advised Muthoot with Partner Srinath Dasari taking the lead who was assisted by Associates Nanditha Gopal, Tony Matthew and Vivek Kumar..Matrix was advised by the Mumbai office of AZB led by Partner Abhijit Joshi. Luthra advised Baring with Partner Sundeep Dudeja taking the lead along with Senior Associate Tanmay Amar..The company plans on using the funds for meeting capital needs and promoting business growth. Speaking to reporters, George Alexander Muthoot, Managing Director of the company said “The Muthoot Group has been engaged in the business for the last 123 years and has an unblemished track record, trust and goodwill among customers and stakeholders alike. The inclusion of global investors into our midst is a significant milestone and marks a new chapter in our journey. The support from such reputed investors is an endorsement of the robust business enterprise that we have nurtured and built over our lifetimes and that of our ancestors.”.VC Circle reports that the organized gold loans market in India is estimated at around Rs. 220-270 billion with a CAGR of ~38 percent from FY 02-09. South India continues to account for 85-90 percent of the gold loans market in India, with organized gold loans portfolio translating into a marginal 0.12 percent of the value of total gold stock in India.