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IIFL Finance offers 10.5% interest rate for public on Rs 1000 crore bond issue Posted On 6th August 2019 : Posted By VISHAL MEDIA
IIFL Finance offers 10.5% interest rate for public on Rs 1000 crore bond issue
Raipur, 6th August 2019 : IIFL Finance, one of India’s largest Non-Banking Financial Companies, will open a public issue of bonds on August 06, 2019, offering interest rate of 10.5% and high degree of safety. Compared to bank fixed deposits of less than 6% per annum, IIFL bonds offer at least 4 percentage points higher to retail investors.
IIFL bonds offer attractive yields to retail investors at a time when RBI is likely to cut interest rates further and stock markets are giving negative returns.
The IIFL Bonds offer highest interest rate of 10.50% p.a. for tenor of 69 months. It also offers 10.00% p.a. for short tenor of 15 months for the secured category. The bonds have monthly, quarterly and annual payment frequency along with zero coupon bonds. The other tenor offered is 39 months for secured category. . Corporates and Trusts, which are paying only MAT, can also invest in the bonds, especially 15 month tenor, where the rate is very attractive. Given the short term liquidity tightening, the 15 month bonds are well priced.10% interest rate for such entities becomes very attractive on a tax adjusted basis. No other similar instrument gives such returns.
CRISIL has rated the instrument as AA/Stable, which indicates that the instruments are considered to have a high degree of safety for timely servicing of financial obligations and carry very low credit risk.
The IIFL Bonds would be issued at face value of Rs 1,000 and the minimum application size is Rs 10,000 across all categories. The public issue opens on August 06, 2019 and closes on August 30, 2019, with an option of early closure. The allotment will be made on first come first served basis.
Sumit Bali, CEO, IIFL Finance said, “Through our strong physical presence of 1,947 branches across India and a well-diversified portfolio, we are able to meet the credit requirement of various segments of underserved population. The funds raised will help us in expanding our operation in more such areas.”
The UK-based CDC Group backed IIFL Finance will issue bonds aggregating to Rs 100 crore, with a green-shoe option to retain over-subscription up to Rs 900 crore (aggregating to a total of Rs 1,000 crore).
IIFL Finance is a part of the IIFL Group, which has emerged as one of India’s largest retail-focused financial services companies. IIFL Finance’s Loan Assets under Management is about Rs 35,000 Crores. Most importantly, 85% of the book is retail - which is focused on small ticket loans.
IIFL Finance had a gross NPA of 1.9% and Net NPA of 0.6%. Total Capital Adequacy Ratio (CAR) stood at 19.2% at the end of March, 2019, including Tier I capital of 16.0%, as against the statutory requirement of 15% and 10% respectively. In FY19, IIFL Finance reported a profit after tax of Rs 717.4 crore, up 55% on year with a robust return on equity of 18.3%. It has strong relationship with multiple banks and financial institutions. Dependency on short-term borrowing sources which is typically Commercial Paper (CP) is quite less and the company has successfully navigated the dry down on the CP market since 2018 IL&FS crisis. CP as source of funds has reduced it from 24% at end of September 2018 to 12 % at the end of March 2019.
The lead managers to the issue are Edelweiss Financial Services Ltd, IIFL Securities Limited, ICICI Securities, and Trust Investment Advisors Private Ltd. The NCDs will be listed on the BSE Limited and National Stock Exchange of India Limited (NSE), to provide liquidity to investors.
About IIFL Finance
India Infoline Finance Limited (“IIFL” or the “Company”) is a Systemically Important Non-deposit accepting Non-Banking Financial Company (“NBFC-ND-SI”) registered with the RBI, catering to the credit requirements of a diverse customer base with its plethora of products. IIFL offerings include home loans, gold loans, business loans including loans against property and medium and small enterprise financing, micro finance, developer and construction finance and capital market finance; catering to both retail and corporate clients. The Company is a subsidiary of IIFL Finance Limited (erstwhile IIFL Holdings Limited), which is one of India’s leading financial services player, primarily engaged in the business of loans and mortgages, wealth and asset management, retail and institutional broking and investment banking. Subsidiaries of the Company are, IIFL Home Finance Limited (erstwhile India Infoline Housing Finance Limited), Samasta Microfinance Limited and Clara Developers Private Limited.
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