India Infoline Investment Services raised around Rs 725 crore through its retail non-convertible debenture issue, according to market sources. This suggests that the core issue of Rs 375 crore was fully subscribed while the oversubscription limit (Rs 375) was slightly fell short of being fully exhausted.
The issue has got good enough retail participation. Retail investors and high net worth individuals invested around Rs 500 crore while the rest amount (Rs 220 crore) has come from qualified institutional buyers, a person involved in building up the issue told Moneycontrol.com.
An NCD is a type of loan issued by a company that cannot be converted into stock and usually carries a higher interest rate than a convertible debenture. IIFL issue offered a coupon rate in the range of 11.70-11.90% with three tenures — ranging from three years, forty months and five years as redemption date. The issue that had opened on August 4, closed August 8.
However, the company has not yet officially declared the number of total funds raised through the issue. When contacted by Moneycontrol.com a company source said, We will release the number tomorrow. Banks have issued only provisional numbers. We are still collecting subscription details across the country.
At a time when equity market is going through high degree of volatility, people will prefer to look at debt instruments that are offering higher rate of interest, said investment bankers.
A number of non-banking finance companies or NBFCs recently followed the NCD route to raise funds. Those include Shriram City Union, Shriram Transport Finance, Muthoot Finance, and Manappuram Finance. More companies are expected to do the same.
The reason: Higher cost of funds due to rising interest rates. Moreover, banks too are shying away from NBFC’s (credit) exposure on the back of the Reserve Bank of India’s (RBI) concern over rising exposure to NBFC loans.
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