Manappuram Finance is in talks to acquire a housing finance company, in a bid to bring down its dependency on gold loans.
"We plan to foray into the housing finance sector through acquisition and are almost sure about our target company. A deal can happen within the next six months. We will need another six months for regulatory approval," V P. Nandakumar, managing director and chief executive officer, said.
The Kerala-based gold loan company has been planning a foray into the housing finance sector to work around the"concentration risk'' alert by the Reserve Bank of India.
"We may enter the (housing finance) sector through two ways: an existing housing finance company may be bought over or we may securitise the loan assets of those HFCs starved of funds," Nandakumar said on the sidelines of a conference on corporate governance organised by Indian Chamber of Commerce.
Funding the acquisition won't be a problem as Manappuram has the ability to raise debts, he said.
"We are well-capitalised and are one of the least-leveraged companies in the sector. So, additional liabilities won't be a problem, if we take loans. What we want is to build our assets and grow fast," he said.
Manappuram is planning a housing finance portfolio of around Rs 3,000 crore in five years, consisting mainly of loans to budget houses.
To attain that level, the company would be tapping its 1.6 million gold loan customer base, many of whom are potential house-owners.
Simultaneously, Manappuram is also looking at insurance broking as the promoters are already into it.
"We plan to remain a gold loan company, but we plan to expand our portfolio. The regulator doesn't like NBFCs depending on a single sector. We are already into SME lending as well as loans against properties," he said.
Fiscal 2013-14 has been difficult for gold loan companies after the loan-to- value gap was raised from 60% to 75% in January.
"The regulatory environment is now stable and there is level-playing field. While competition is growing, the size of the market is also very large. This year, our gold loan business will decline on like higher LTV. Next year, we expect a 15-20% growth," he said.