Muthoot Finance sells Rs.725-Cr distressed gold loan portfolio to Arcil

Kochi-headquartered Muthoot Finance has sold a gold loan portfolio of INR 725 crore to Asset Reconstruction Company of India (Arcil). It will receive 15% of the consideration in cash and the balance is in the form of security receipts. This is the first time a gold loan portfolio is being sold by a lender to an ARC. Muthoot did not take a significant haircut as gold value has appreciated. The transaction is structured in a way that upside would be shared by the Avenue Capital-backed ARC with the finance company.