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Shriram City Union Finance plans to raise Rs 500 crore through an issue of non- convertible debentures, the company’s Executive Director and CFO, Subhasri Sriram, told Business Line today.
The issue will hit the market towards the end of this month. The instruments will be available for subscription in tenors of 3 and 5 years. The interest rates, however, will be fixed closer to the date of issue, she said.
A number of companies, mainly the non-banking finance companies such as Shriram City Union Finance, have been opting for the NCD route to raise funds.
Sriram said that NCDs, as instruments of investments, have come to stay. After the liquidity tightness experienced around 2008, borrowers, particularly the NBFCs, learnt a lesson—it is not too wise to depend only on bank finance.
Convertible debentures and optionally convertible debentures are not much fancied by either side, Ms Sriram said. The central issue with the CDs is the difficulty in fixing a conversion premium that is satisfactory to both the issuer and the subscriber. Optionally convertible debenture also has that same disadvantage while in addition being more complicated instruments.
SCUF gives retail loans mainly for small businesses and passenger vehicle purchases. It also gives loans against gold. It current manages financial assets of Rs 13,800 crore.
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