MUMBAI, Sept 23: Reflecting a strong investor demand, the non-convertible debenture (NCD) public issue of Shriram City Union Finance has been over-subscribed, while that of Religare Finvest is nearing full-subscription days ahead of their respective closing dates.
An NCD is a type of loan-linked security issued by a company that cannot be converted into stock and usually carries a higher interest rate than a convertible debenture.
As per the latest data available with the stock exchanges, the NCD public issue of Shriram City Union Finance has got subscribed 1.26 times ahead of its scheduled closing on September 26.
At the same time, Religare Finvest’s NCD issue has received a subscription of 83 per cent.
While Religare public issue opened on September 14 and would close on September 27, the NCD issue of Shriram City Union Finance had opened for bidding on September 12.
At the end of bidding on Friday, NCDs of Shriram City Union Finance had received bids worth Rs 314.04 crore, as against Rs 250 crore on offer.
In addition, Religare Finvest’s NCDs got bids worth Rs 206.70 crore, as against Rs 250 crore on offer.
Both the companies are raising Rs 250 crore each, but have kept the options open to retain Rs 250 crore each in case of over-subscription of the issues.
Both the issues have received overwhelming response from financial institutions and individual investors.
Experts said that volatile conditions in the equity markets have also led to the companies tapping NCD route to raise funds. Besides, investors are getting attracted to good returns being offered in these NCD issues.
Investors are being offered returns between 11.5 per cent and 12.6 per cent per annum through these NCDs.
Two more NCD issues—of gold financing company Muthoot Finance and infrastructure funding entity Srei Infrastructure Finance—are also currently open for bidding, but the demand has been relatively lacklustre so far.
While NCDs of Muthoot Finance have received only 17 per cent subscription, Srei Infrastructure Finance has managed to get only 1,686 bids, as against 15 lakh debentures on offer.
Muthoot is looking to garner up to Rs 500 crore, while Srei’s NCD issue is aiming to raise Rs 150 crore.
“Investors are going slow on these issues because of several multiple NCD issues options are available with them,” Wellindia Vice-President Research Vivek Negi said.
Earlier this month, India Infoline Finance’s Rs 500 crore NCD issue had received overwhelming response across the investor class as the issue get oversubscribed and closed ahead of its schedule. (PTI)
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