Mahindra Financial to raise up to Rs2,000 crore via NCDs
Mumbai: A year after its maiden issue, Mahindra & Mahindra Financial Services Ltd has returned to raise up to Rs2,000 crore by selling non-convertible debentures (NCDs).
In June 2016, the lender had raised Rs1,000 crore by selling NCDs to public.
The base size of the current issue is Rs250 crore but the company has retained the option to accept oversubscription of Rs1,750 crore.
The rural-focused non-banking financial services company is selling unsecured AAA-rated NCDs maturing in seven, 10, and 15 years. Retail investors will be paid an annual coupon of 7.85% on seven-year paper and 8% on 10-year NCD. The 15-year NCD, which can be called back by the lender after 10 years by repaying investors, carry an annual rate of 8.05%. The issue will be open between 10 and 28 July.
The money raised will be used for lending, refinancing existing debt as well as for general corporate purpose, the company said in a statement.
Ramesh Iyer, vice chairman and managing director, said that demonetisation had impacted collections, which are mainly cash-based, between November and February 2017. However, it has now normalised and there are enough signs that cash flow in most rural areas are improving, he added.
According to Iyer, expectations of normal monsoon rains and conversations with the auto makers suggests that lender has enough opportunities to grow its loan book.
Mahindra & Mahindra Financial provides loans to buy new as well as pre-owned auto, utility and tractor vehicles.
In fiscal 2017, the loan book of the company on a standalone basis was at Rs425.23 billion against Rs366.62 billion the previous year.
As at the end of March, the company had outstanding NCDs of Rs163.91billion.