Shriram Transport to raise $83.3M through NCDs, targets $250M with oversubscription

Non-banking finance company Shriram Transport Finance Company Limited is proposing a public issue of Non-Convertible Debentures (NCDs) worth Rs 500 crore ($83.3 million). 

The firm will issue 50,00,000 secured redeemable NCDs of the face value of Rs 1,000 each. 

“We have an option to retain subscriptions till Rs 3,000 crore. But we will close the issue after we get subscriptions of Rs 1,500 crore ($250 million),” Uday Revankar, managing director and chief executive at Shriram Transport Finance, said. 

Shriram Transport Finance has a primary focus on financing pre-owned commercial vehicles. 

Through this NCD issue the company plans to raise up to Rs 500 crore, with an option to retain 

over-subscription up to the shelf limit of Rs 3,000 crore. The issue opens on July 2, 2014 and will close on July 22, 2014, with an option of early closure, subject to the base issue size being fully subscribed prior to such early closure and/or extension. 

The NCDs proposed to be issued under this issue have been rated ‘CRISIL AA/Stable’ by CRISIL, ‘CARE AA+’ by CARE and ‘IND AA+’ by India Ratings for an amount of up to Rs 3,000 crore. These ratings indicate high degree of safety regarding timely servicing of financial obligations and carry very low credit risk.

The funds raised through this issue will be used for various financing activities including lending and investments, to repay the existing loans and business operations, including for the company’s capital expenditure and working capital requirements.

Options of investment tenors are three, five and seven years, with yields of 11 per cent per annum, 11.25 per cent per annum and 11.50 per cent per annum respectively for individual investors. Senior citizens are entitled to additional yield of 0.25 per cent per annum across all tenures.

The NCDs are proposed to be listed on National Stock Exchange and BSE.

JM Financial Institutional Securities, A. K. Capital Services Ltd, Edelweiss Financial Services and ICICI Securities are the lead managers to the issue. IDBI Trusteeship Services is the debenture trustee to the issue, while Integrated Enterprises (India) is the registrar to the issue.

Last year, Piramal Enterprises acquired approximately 10 per cent stake in Shriram Transport Finance Company, for Rs 1,652 crore ($307 million) from private equity major TPG.

In April, Piramal bought 20 per cent of Shriram Capital for Rs 2,014 crore ($334 million). Shriram Capital is the holding company for the Chennai-based Shriram Group’s various financial services units, including Shriram Transport Finance and Shriram City Union Finance besides two insurance ventures.

(Edited by Joby Puthuparampil Johnson)

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