Edelweiss NBFC retail bond issue opens on Monday

ECL Finance Ltd, the NBFC arm of Edelweiss Group, said investors can subscribe to its new series of debentures — a type of debt instrument — from Monday, Nov 4.

The bonds will carry interest of 9.9%-10.41%, depending on the tenure.

The base issue will comprise 10 lakh debentures of Rs 1,000 each, amounting to Rs 100 cr. In case of oversubscription, the total amount can be increased to up to Rs 500 cr.

The debentures, which are available from Axis Bank and Edelweiss Financial Services, can be purchased till Nov 22 and will be listed on BSE.

ECL Finance offers loans to small and medium-sized enterprises and individuals, including structured collateralized credit, wholesale mortgages, ESOP and margin funding loans, LAP and agri-credit.

The non-convertible debentures being offered from tomorrow will carry an ‘effective’ interest yield of 9.9% per year for the 24 months tenure, 10.2% for 39 months and 10.4% for 120 months tenure (monthly option).

Existing holders of bonds issued by ECL Finance and Edelweiss shareholders get an extra 0.25% interest.

NBFCs, or non-bank finance companies, in India have found it harder to tap banks for loans in the last two years due to the default of infrastructure financing firm IL&FS, forcing them to explore alternate avenues of funding, including raising money from the public and foreign investors.

The funds raised will be used for the purpose of onward lending and repayment of interest and principal of existing borrowings of the company and for general corporate purpose, Edelweiss said.

The company had issued NCDs worth up to Rs 300 cr in May. The issue had a total collection of Rs 212 crores from retail investors.

“The overwhelming response to our last NCD issue reflected the investor appetite for high-quality issuances of financial instruments from Edelweiss,” Deepak Mittal, MD & CEO of ECL Finance.

“While we have maintained a diversified business, we hope to further diversify our funding sources, with the public issue of NCDs,” he added.

Earlier this year, a unit of Caisse de dépôt et placement du Québec (“CDPQ”), one of North America’s largest pension fund managers, had invested ₹ 1040 cr in ECL Finance, under a total investment commitment of ₹ 1,800 crores.