Srei seeks Sebi, RBI nod to buy back NCDs from retail investors

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Published: September 18, 2019 5:11:44 AM

According to Srei, the proposed step to consolidate its lending business into one entity is an attempt to create a long-term structure to be ready for “merger or conversion into a bank” and roping in strategic investors in order to be able to continuously get access to capital for further growth.

Srei, Sebi, RBI, NCD, retail investor, SIFL, industry news,  Shaktikanta DasSEFL is a wholly-owned subsidiary of SIFL. For Srei group companies, average borrowing cost for the issued NCDs was around 10-11%.  (Reuters)

Infrastructure financing major Srei has approached capital markets regulator Sebi and banking regulator RBI, seeking approvals for on tap buy back of its non-convertible debentures (NCDs) from retail investors for “preventing interested parties from gaming the system at the expense of investors”. In a letter to Sebi chairman Ajay Tyagi and RBI governor Shaktikanta Das, Srei Infrastructure Finance chairman Hemant Kanoria said, “At Srei, we would be happy to on tap buy back of NCDs from retail investors…”

Kanoria said the proposed buy back of NCDs would prevent interested parties from “gaming” the system at the expense of retail investors and offer investors a simple exit route, which would make NCDs more popular among retail investors. Since 2012, when Srei had started issuing NCDs through public issue, the group has raised around Rs 2,148 crore and Rs 2,167 crore for Srei Infrastructure Finance (SIFL) and Srei Equipment Finance (SEFL), respectively.

SEFL is a wholly-owned subsidiary of SIFL. For Srei group companies, average borrowing cost for the issued NCDs was around 10-11%.  Notably, in order to rejig its organisational structure, in July the board of directors of SIFL had approved transfer of its lending business into SEFL. According to Srei, the proposed step to consolidate its lending business into one entity is an attempt to create a long-term structure to be ready for “merger or conversion into a bank” and roping in strategic investors in order to be able to continuously get access to capital for further growth.

Srei Infrastructure Finance reported a consolidated profit after tax of Rs 42.67 crore during the first quarter of FY20 compared to Rs 139.55 crore during the corresponding quarter of FY19, as disbursements declined year-on-year. On Tuesday, SIFL’s scrip fell 4.86% to end the day at Rs 12.33 on the Bombay Stock Exchange.

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