IIFL Finance, a non-banking financial company, will open a public issue of bonds on August 6 to raise up to  1,000 crore, for business growth and expansion. The bonds offer up to 10.5 per cent yield and a high degree of safety.

The UK-based CDC Group-backed IIFL Finance will issue secured and unsecured redeemable non-convertible debentures (NCDs), aggregating to  100 crore, with a green-shoe option to retain over-subscription up to  900 crore (aggregating to a total of  1,000 crore).

The IIFL Bonds offer the highest yield of 10.50 per cent per annum for tenor of 69 months. It also offers 10 per cent p.a. for a short tenor of 15 months for the secured category. The bonds have monthly, quarterly and annual payment frequency along with zero-coupon bonds. The other tenor offered is 39 months for the secured category.

Corporates and Trusts, which are paying only the MAT, can also invest in the bonds, especially 15-month tenor, where the rate is very attractive. Given the short term liquidity tightening, the 15-month bonds are well priced 10 per cent yield for such entities becomes very attractive on a tax adjusted basis. No other similar instrument provides such returns.

CRISIL rating

CRISIL has rated the instrument as AA/Stable, 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.

Aditya Prabhu, Director, IIFL, said, “Through our strong physical presence of 1,947 branches across India and a well-diversified portfolio, we can to meet the credit requirement of various segments of the underserved population. The funds raised will help us in expanding our operation in more such areas.”

IIFL Finance is a part of the IIFL Group, which has emerged as one of India’s largest retail-focused financial services companies. It’s loan assets under management is about  35,000 crore. Most importantly, 85 per cent of the book is retail – which is focused on small-ticket loans.

IIFL Finance had a gross NPA of 1.9 per cent and net NPA of 0.6 per cent. Total Capital Adequacy Ratio (CAR) stood at 19.2 per cent at the end of March, 2019, including Tier I capital of 16 per cent , as against the statutory requirement of 15 per cent and 10 per cent respectively.

In FY19, IIFL Finance reported a profit after tax of  717.4 crore, up 55 per cent on year with a robust return on equity of 18.3 per cent. It has a strong relationship with multiple banks and financial institutions. Dependency on short-term borrowing sources which is typically commercial paper (CP) is quite less and the company has successfully navigated the dry down on the CP market since 2018 IL&FS crisis. The CP as a source of funds has reduced it from 24 per cent at the end of September 2018 to 12 per cent at the end of March 2019.

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

Minimum application size

The IIFL Bonds would be issued at face value of  1,000 and the minimum application size is  10,000 across all the categories. The public issue opens on August 06, 2019 and closes on August 30, 2019, with an option of early closure. The allotment will be made on a first come first-served basis.