Religare Enterprises’ NBFC arm led Religare Finvest joins PE-backed gold loan firm Muthoot Finance and Shriram City Union Finance to launch a public issue of non-convertible debentures (NCD) within the next one week. All the issues are open for subscription for a period of two weeks.
Religare Finvest aims to raise Rs 250 crore ($45 million) with an option to retain over-subscription of up to Rs 250 crore. Muthoot Finance and Shriram City Union Finance are the other two NBFCs to open public issuance of NCD for a similar amount.
Early this month, India Infoline Finance opened its NCD issue for raising up to Rs 500 crore.
The NCDs are proposed to be listed on the Bombay Stock Exchange and National Stock Exchange. “We are expecting a credit growth of 18-20 per cent in this financial year. However, starting next year, we would require additional funding and we decided to go for a NCD issue,” said Kavi Arora, managing director & CEO of Religare Finvest.
At present, Religare has around Rs 8,000 crore as bank loans of the total Rs 12,500 crore total loan portfolio, over Rs 2,500 crore through commercial papers and rest from NCDs and capital market. SME finance and retail capital market finance activities accounted for 70 per cent and 13 per cent of the total loan book, while corporate lending and corporate auto lease represented 15 per cent and 2 per cent respectively.
The company’s cost of borrowing has increased 40 basis points in the current financial year compared to the last year. The company plans use the net proceeds of the issue for various financing activities including lending and investments, and to repay its existing debt, towards business operations including capital expenditure and for working capital requirements. While banks offer 9-9.5 per cent for a five-year period, NCDs of a similar tenure can offer between 10-12 per cent.
Last year Religare Finvest had raised Rs 150 crore from Avigo Capital Partners, a mid-market private equity firm.
(Edited by Prem Udayabhanu)