Edelweiss Financial Services has informed that it will issue secured, redeemable, non-convertible debentures (NCDs) worth Rs 400 crore, starting April 6, 2023, with an effective yield of 8.94-10.46 per cent per annum.
Investors can purchase NCDs until April 21, 2023, after which they will be listed on the secondary market where they can be traded in the dematerialised format. The minimum application amount is Rs 10,000.
There is a face value of Rs. 1,000 for each unit. The issue size is Rs. 200 crore with the option to retain oversubscription up to Rs. 200 crore, resulting in a total issue size of Rs. 400 crore. The majority of proceeds from this tranche of issue will be used to repay or prepay the interest and principal of existing borrowings of the company. As much as 25 per cent will be used for general corporate purposes.
Any category of investors who purchase 120-month tenure NCDs, in which the interest is paid monthly, is eligible for the highest rate of interest of 10.46 per cent.
Edelweiss Financial Services NCDs have tenures of 24, 36, 60, and 120 months across all categories of interest payments, such as monthly, quarterly, or cumulative interest payments at the time of maturity.
For instance, when you choose the yearly interest payment option with a minimum tenure of 24 months, the coupon rate for NCDs is 8.94 per cent. Those who purchase 120-month tenure NCDs, which will pay interest annually over a period of 120 months, will be offered an effective yield of 10.44 percent.
Any investor already holding shares, NCDs, or company bonds are also eligible for a maximum of additional 0.20 per cent incentive per annum. They should be primary holders on the deemed date of allotment.
However, investors who opt for interest payment only at maturity will not qualify for this incentive, but are promised an additional yield.
The company has an AA minus rating with a negative outlook from Crisil and Icra, which is far from the AAA rating required to consider the investment to be risk-free. This rating is based on a firm’s ability to raise cash from its internal and external operations and its sustainability. The NCDs proposed to be issued have been rated “ACUITE AA-/ Negative by Acuite.
Due to the fact that it is a secured debenture, your investments are secured against the assets of the company. However, this depends on the company’s asset to liability ratio. Edelweiss Financial Services
has a net worth of at least Rs. 500 crore, as per the audited balance sheet of the preceding financial year. It has a consistent operating profit record for three years, the company informed.
The company’s outstanding borrowings through debt securities, on a standalone basis, as on December 31, 2022 amounts to Rs. 2,492 crore.
EFSL was incorporated in 1995 under the name Edelweiss Capital Limited and began operations as an investment banking firm after being granted a Category II license by the Securities and Exchange Board of India (Sebi). In October 2000, Edelweiss Capital Limited received a Category I Merchant Banker license from Sebi.