Mahindra and Mahindra Financial Services plans to raise ₹2,000 crore through issue of unsecured redeemable non-convertible debentures (NCDs) via a public issue to fund its rural lending business.

The issue opens on July 10 and closes on July 28. However, the issue, with a base size of ₹250 crore, can be closed earlier than July 28, depending on the success of the subscription, said a top Mahindra Finance official.

This is the second such NCD issue by the company in the last two years. “We have doubled our issue size and the confidence has come from the positive sentiment in the rural economy auguring well,” said the company’s Chief Financial Officer V Ravi.

He further added that the issue will be split between four categories of investors — qualified institutional buyers (QIBs), corporates, high net worth individuals and retail individuals — and will be offered in three tenures – seven, 10 and 15 years.

For QIBs and corporates, the coupons on offer are 7.75 per cent, 7.90 per cent, and 7.95 per cent, respectively. For the other two categories, the rates offered are higher at 7.85 per cent, 8 per cent, and 8.05 per cent respectively, payable annually.

Monsoon to drive growth

Mahindra Finance Managing Director Ramesh Iyer said: “Drought and demonetisation have impacted the rural market. However, with better-than-expected monsoon this year, we are expecting good growth. The sentiment will continue to remain good.”

Infrastructure and farm-related cash flows are important and expected to support rural growth, he pointed out.

“We are expecting to maintain 20 per cent growth this year also,” Iyer said, adding that last year growth was slightly impacted by poor monsoon and demonetisation. Edelweiss Financial Services, AK Capital Services, Trust Investment Advisors and YES Securities are the lead managers to the issue.

Shares of M&M Financial closed at ₹359.75, up 2.19 per cent, on the BSE.

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