In its inaugural public issue of Non-Convertible Debentures (NCDs), Vivriti Capital plans to raise Rs 500 crore with a coupon rate of 10.50 per cent and maturities of up to 24 months
Non-Banking Financial Company (NBFC) Vivriti Capital announced its first public issue of non-convertible debentures (NCDs) on August 18, aimed at raising Rs 500 crore. The public offering will conclude on August 31, with an option for early closure if fully subscribed.
The NCDs, which are secured, rated, listed, and redeemable, include a base issue size of up to Rs. 250 crore, with an option to retain oversubscription up to an additional Rs 250 crore. One can apply for a minimum of 10 NCDs across series collectively, with multiples of 1 NCD after that.
The NCD Offer
The NCDs are of five types, with varying tenures and interests. For instance, they are available in 18-month and 24-month terms. Those opting for ‘Series V’ NCDs with a 24-month term and annual payments will get the highest coupon rate of 10.50 per cent per year. These debt instruments will likely provide effective yields of 9.98 per cent to 10.48 per cent. For ‘Series I’ 18-month NCD with monthly coupon payments, investors can bag 9.57 per cent yearly.
Other options include:
Series II: 18-month tenure, 10 per cent coupon rate with annual payment of coupons
Series III: 24-month tenure, 9.65 per cent coupon rate with quarterly payment of coupons
Series IV: 24-month term, 10.03 per cent coupon rate with monthly payment of coupons
The minimum application size for NCDs is Rs 10,000 across all series collectively, with multiples of Rs 1,000 thereafter.
NCDs Issued By Vivriti Capital
Non-convertible debentures, or NCDs, are debt financial instruments secured against the company’s assets issued to raise funds for a specific purpose. For instance, Vivriti Capital intends to allocate at least 75 per cent of the net proceeds toward lending, financing, and repaying existing borrowings. Up to 25 per cent will be used for general expenses, it says.
According to Vineet Sukumar, founder and managing director of Vivriti Capital, the company has a portfolio of Rs 5,835.80 crore and provides debt solutions to over 194 mid-corporates.
NCDs don’t provide any option of conversion to equity, but they are listed securities. So investors can sell them in the secondary market before maturity.
Though these NCDs offer higher interest rates than bank fixed deposits, NCD investments carry low credit risk. Credit rating agency CARE Ratings has assigned a “CARE A; Positive” rating to the NCDs as of June 12, 2023. Though this rating falls short of CARE AAA and CARE AA, CARE says issuers with this rating are considered to have adequate safety regarding the timely servicing of financial obligations. Fixed-income investors looking for higher returns by taking higher risks can consider including NCDs in their portfolios.