IIFL Finance likely to raise up to Rs 1,000 crore via bonds


Mumbai: IIFL Finance, an NBFC backed by the UK-based CDC Group, plans its first public bond sale this financial year to raise up to Rs 1,000 crore, said three people familiar with the matter.

The bonds may be offered in early August and are aimed at diversifying the nonbanking finance company’s borrowing portfolio after the recent market squeeze pushed up cost of funds. The bonds are likely to offer about 10% with seven-year maturity.

The company will issue secured and unsecured bonds, known as redeemable non-convertible debentures. The proposed issuance will be for Rs 100-200 crore, with the option to retain subscriptions up to Rs 1,000 crore, dealers said.

“The retail borrowing will help expand their liabilities profile as funding avenues are choking for nonbanking finance companies amid a crisis of capital,” said one person.

IIFL Finance did not comment on the matter.

The bonds will likely offer about 10% with maturities ranging from 13 months to 84 months, depending on retail investor appetite and expectations, dealers said. There will be monthly, quarterly and annual payment options.

The company is in talks with at least three domestic arrangers to help raise the money. ICICI Securities, Edelweiss Fin and Trust Capital are said to be helping the company. The arrangers could not be contacted immediately for comments.

Rating companies CRISILNSE -0.31 % and CARE have given IIFL Finance an ‘AA’ rating with a stable outlook.

IIFL Finance had Rs 34,904 crore of assets under management at the end of March. Retail credit including home loans, gold loans, small business loans and microfinance loans, constituted 85% of its loan book.

The company has over 1,800 branches in smaller locations where it gives loans in smaller ticket sizes. In FY19, IIFL Finance reported a net profit of Rs 717.4 crore, up 55% year-on-year. While an outright sale of its commercial vehicle business aided profit margins, the company obtained a fair share of business volumes in the first half of the financial year through retail lending.

IIFL Finance had gross non-performing assets of 1.9% and net NPAs of 0.6%.

The company has reduced its dependence on commercial paper sales to raise short-term funds, which is now considered taboo for nonbanking finance companies.

Its market share narrowed to 12% at the end of March from 24% in September. It hired former Kotak Prime CEO Sumit Bali last year to lead its NBFC operations and added about 400 branches since then, focusing on underserved areas.