IIFL Finance, one of India’s largest Non-Banking Financial Companies, will open a public issue of bonds on March 03, 2021, to raise up to Rs. 1,000 crore, for the purpose of business growth and capital augmentation. The bonds offer up to 10.03% yield and high degree of safety.
The Fairfax and CDC Group backed IIFL Finance will issue unsecured redeemable non-convertible debentures (NCDs), 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).
The IIFL Bonds offer highest yield of 10.03% p.a. for tenor of 87 months. The NCD is available in various options like monthly, annual and at maturity.
In the current scenario, the rate of interest offered by IIFL Finance bonds is very attractive compared with other debt products. Liquid funds offer average net yields of 2.8%-3%, ultra-short-term funds offer average net yields of around 3-3.5%., short-term funds offer average net yield is around 4%-4.25%, while banks are currently offering an interest of around 5.1% for a 3 year fixed deposit.
This 10.03% rate is also getting locked in for 87 months. This is a big advantage as liquidity eases post Covid world for next few years, most experts believe that interest rates can head down and to lock-in good interest rate is a big advantage. Today the interest rates on a 10-year government securities are at 6%.
The credit rating has been AA by Crisil and AA+ by Brickwork. Through the crisis, credit rating of IIFL Finance has been reaffirmed by agencies, 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.
Rajesh Rajak, CFO, IIFL Finance said, “Through a strong physical presence of 2500 branches across India and a well-diversified retail portfolio, IIFL Finance caters to the credit need of underserved population. The funds raised will be used to meet credit need of more such customers and accelerate our digital process transformation to enable a frictionless experience.”
He added, “IIFL has an impeccable track record of more than 25 years and all the bond issues and the debt obligations have always been paid on time.”
IIFL Finance is one of India’s largest retail-focused financial services companies. IIFL Finance’s Loan Assets under Management is Rs 42,264 crore. Most importantly, 90% of the book is retail – which is focused on small ticket loans.
IIFL Finance had a gross NPA of 1.61% and Net NPA of 0.77%. Total Capital Adequacy Ratio (CAR) stood at 21.4% at the end of December, 2020, including Tier I capital of 18.0%, as against the statutory requirement of 15% and 10% respectively. In Q3 FY21, IIFL Finance reported a profit after tax of Rs 268 crore, up 26% on year with a robust return on equity of 18.4%. It has strong relationship with multiple banks and financial institutions.
The lead managers to the issue are Edelweiss Financial Services Limited, IIFL Securities Limited and Equirus Capital Private Limited. The NCDs will be listed on the BSE Limited and National Stock Exchange of India Limited (NSE), to provide liquidity to investors. 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 March 03, 2021 and closes on March 23, 2021, with an option of early closure. The allotment will be made on first come first served basis.