Gold financing company Muthoot Finance has sought capital markets regulator Sebi’s approval for raising up to Rs 400 crore through non-convertible debentures (NCDs) to support lending activities.
The issue aims to garner up to Rs 200 crore with an option to retain over—subscription of up to Rs 200 crore, as per draft prospectus filed with Securities and Exchange Board of India (Sebi).
NCDs are loan-linked securities issued by a company and can’t be converted into stocks. They usually carry a higher interest rate than a convertible debenture.
“Public issue by Muthoot Finance of secured redeemable NCDs and unsecured redeemable NCDs of face value of Rs 1,000 each, aggregating up to Rs 2,000 million with an option to retain over subscription up to Rs 2,000 million for issuance of additional NCDs aggregating to a total of up to Rs 4,000 million,” the prospectus stated.
The funds raised through the issue would be used for financing and lending activities and for general corporate purposes.
Muthoot Finance has already raised a total of Rs 864 crore via two tranches through NCDs route in the current fiscal (2014-15) so far.
ICICI Securities is the lead manager to the proposed issue, while Link Intime India Private Limited is the registrar.
Muthoot Finance is one of the largest gold financing company in India, with more than 4,200 branches as of June 30, 2014.