Non-banking finance company IIFL Finance on Tuesday said it has bought back USD 50 million worth of overseas bonds with funds raised through a loan from a global bank. The buyback will reduce the company's cost of funds by around 225 basis points. IIFL Finance had raised USD 400 million through its maiden overseas bonds in February 2020 at an issue price of USD 998.75 per bond to fund its business growth, a release said. The company, which had in the last two years bought back bonds worth USD 26.3 million in various tranches, launched a tender offer on March 21, 2022 to further buy back up to USD 50 million worth of bonds. The minimum bid price for bondholders under the tender offer was USD 970 per bond. The face value of one bond is USD 1,000.
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However, most bids received were closer to the par value, and accordingly the company bought back the entire tender amount of USD 50 million at par. "The abundant liquidity and the price at which we bought back reflect the confidence that bondholders have in us. Also, this reduces our cost of funds by approximately 225 basis points for the arrangement," IIFL Finance CFO Rajesh Rajak said. The buyback was done under a modified Dutch auction process which is a reverse book building mechanism. All bids (i.e, at par or lower) were received at a uniform price. After this buyback, USD 323.7 million of bonds remain outstanding, the release said.
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As on December 2021, IIFL Finance's free cash, equivalent and undrawn lines stood at Rs 9,145 crore, adequate to meet not only its all the near-term liabilities but also to fund the future growth momentum. Its loan assets under management was Rs 46,780 crore at the end of December 2021, while the capital adequacy ratio stood at 25.4 per cent and provision coverage ratio was at 133 per cent. As on December 2021, about 94 per cent of its loan book comprised of retail loans.
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