India's largest Gold Financier buys major stake in Sri Lankan financial services firm
India’s largest gold financing company-Muthoot Finance has announced acquisition of 29.98% stake in Colombo, Sri Lanka –based Asia Asset Finance PLC (AAF) for nearly $2.1 million (approx. Rs 127.19 million). The stock market disclosure states that the company acquired 167 Mn shares from Asia Capital PLC, a major shareholder of Asia Asset through Colombo Stock Exchange.
The Indian government had rolled out several regulatory curbs on lending against gold, which in turn had affected the business of gold-based Non-Banking Financial Companies (NBFCs) like Muthoot Finance in a big way. This had prompted such firms to diversify their operations, although a majority of such restrictions were rolled back later.
According to sources, the recent acquisition is likely to help the company to branch out its operations into neighboring Sri Lanka. The foray into Sri Lankan market is likely to benefit the company as it plans vast expansion of AAF’s customer base in the country.
Muthoot Finance will support AAF to operationalize loans against gold jewelry in the Sri Lankan market. AAF, through its 11 branches across Sri Lanka currently offers retail finance, hire purchase and business loans.
Muthoot Finance is India’s largest gold loan financing company with over 4,000 branches spread over 21 states and 4 Union Territories in the country and a customer base of over 10 million.