Mumbai: Tata Capital’s flagship lending arm, Tata Capital Financial Services, Tuesday said it will raise up to ₹ 7,500 crore in its maiden non-convertible debenture (NCD) sale.
The bond issue by the non-bank lender involves raising ₹ 2,000 crore through the issue of three, five and 10-year paper, while the Tata group-company can retain oversubscriptions of ₹ 5,500 crore more.
The company, which finances consumer loans and small businesses, is offering a coupon rate of between 8.70% and 9.10% depending on the investor class and tenor, it said.
Applications need to be in multiple of ₹ 1,000 and the minimum subscription amount has been set at ₹ 10,000. The money raised through the issue, which will open on 10 September, will be primarily used for on-lending to business. The bond sale has dedicated allotments to institutional buyers, corporates, high net individuals and retail investors.
Tata Capital’s managing director and chief executive officer, Rajiv Sabharwal, said the group till now was depending on other sources for its liabilities, but has now decided to go to the public for the resources.
He, however, said that there are no plans for an initial share offering from the company, adding that it has the backing of the diversified conglomerate Tata group for the same and pointed out to a healthy capital adequacy.
The city-based company clocked a post tax net of ₹ 483 crore for fiscal year 2017-18, and was also able to get down the gross non-performing assets ratio to 3.32%, from the 4.94% in the year-ago period.
Sabharwal said most of the reverses were on loans to the infrastructure sector done in 2013-14 and added that the company now believes in diversified lending rather than a concentrated one. Nearly half of its loans are in the resilient consumer finance business, followed by SME finance and commercial finance, he said.
The company would like to increase its exposure to lending related to the diversified Tata group’s activities, according to Sabharwal, which includes lending for consumer durable purchases, supply chain finance and other finance to other dealers. At present, the direct exposure of the lending to Tata group entities is less than 2%, he said.