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IIFL secured NCDs: Should you subscribe?
India Infoline Finance Limited, an NBFC arm of India Infoline Ltd. is all set to open its public issue for secured redeemable NCDs on 17th of this month. The issue will remain open for subscription until 4th October'2013. Through the issue, the company aims to raise a capital of Rs 525 crore, with an option to aggregate a combined maximum capital of Rs. 1050 crore in case of over-subscription.
The money aggregated via public issue subscription is reported to be used by the company to expand its business operations pertaining to loan disbursements against immovable assets and gold. The company also intends to cater to the huge demand for housing loan in small cities. In addition, IIFL is planning to foray into commercial vehicle financing, a sector with immense scope for growth.
The proposed public issue shall offer NCDs at a face value of Rs. 1000. The NCDs available in 4 series: S1, S2, S3 and S4 would have two maturity terms of three and five years. The subscription to IIFL NCDs of both the tenures is reported to provide an annual yield of 12%. The issue also comes with an option to opt for monthly interest payment that then would generate an annual yield of 12.68%.
Different investor classes, including public financial institutions, banks, provident funds, venture capital funds, national investment fund, mutual funds, QFIs not being an individual, resident Indians, NRIs, HUFs can invest into the IIFL NCDs. The investors can subscribe to a minimum of 5 NCDs either individually or as aggregate across all the offered series. The proposed NCDs by IIFL would be listed on both NSE and BSE.
Investment into IIFL public issue of NCDs is certainly a good bet with return offering as high as 12%. Also, AA rating by CARE and BWR AA by Brickwork rating agencies indicate safety of the investment. However, an inherent risk of default on the part of company on both principal and interest payment in case it meets losses has to be accounted for while deciding on the investment.
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