IIFL Finance to raise up to Rs 1,000 crore via secured bonds; to open on 27 September, offer 8.75% yield

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IIFL Finance will open a public issue of secured bonds on September 27, 2021 to raise up to Rs 1,000 crore, for the purpose of business growth and capital augmentation, the company said in a media release on Thursday. The bonds offer up to 8.75 per cent yield and high degree of safety.

The Fairfax -backed IIFL Finance will issue secured redeemable non-convertible debentures (NCDs), aggregating to Rs 100 crore, with a green-shoe option to retain over-subscription up to Rs 900 crore (aggregating to a total of Rs 1,000 crore), the release further said.

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IIFL Finance is one of India’s largest retail-focused financial services companies. 

The IIFL bonds offer highest effective yield of 8.75 per cent per annum for tenor of 60 months, the release claimed. The Non-Banking Financial Company (NBFC) will also offer an incentive of 0.25 percent per annum for existing bond or equity shareholders of the company, the release said. 

The NCD is available in tenors of 24 months, 36 months and 60 months. The frequency of interest payment is available on monthly, annual and at maturity basis for 60 months tenor, while for other tenors it is available on annually and at maturity basis.  

The credit rating has been AA/Stable by Crisil and AA+/negative by Brickwork, which indicates that the instruments are considered to have a high degree of safety for timely servicing of financial obligations and carry very low credit risk.

“Through a strong physical presence of over 2500 branches across India and a well-diversified retail portfolio, IIFL Finance caters to the credit need of underserved population. The funds raised will be used to meet credit need of more such customers and accelerate our digital process transformation to enable a frictionless experience,” Rajesh Rajak, CFO, IIFL Finance said.

IIFL Finance’s Loan Assets Under Management (AUM) is Rs 43,160 crore as on June 30, 2021. Most importantly, 93 per cent of the book is retail – which is focused on small ticket loans.  

As per the information provided by the company, IIFL Finance has consistently maintained low level of NPAs over the years of operations and continues to focus on good quality of assets with gross NPA of 2.21 per cent and Net NPA of 1.02 per cent. As on June 30, about 86 per cent of the company’s consolidated loan book is secured with adequate collaterals which helps to mitigate risks further.  

In Q1 FY22, IIFL Finance reported a profit after tax of Rs 266 crore, up 735 per cent on year with a robust return on equity of 19.7 per cent. It has strong relationship with multiple banks and financial institutions.

The lead managers to the issue are Edelweiss Financial Services Limited, IIFL Securities Limited and Equirus Capital Private Limited. The NCDs will be listed on the BSE Limited and National Stock Exchange of India Limited (NSE), to provide liquidity to investors.

The IIFL Bonds would be issued at face value of Rs 1,000 and the minimum application size is Rs 10,000 across all categories. The public issue opens on September 27, 2021 and closes on October 18, 2021, with an option of early closure. The allotment will be made on first come first served basis.

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