IIFL Finance, one of India’s largest Non-Banking Financial Companies, will open a public issue of bonds on August 06, 2019, offering interest rate of 10.5% and high degree of safety. Compared to bank fixed deposits of less than 6% per annum, IIFL bonds offer at least 4 percentage points higher to retail investors. IIFL bonds offer attractive yields to retail investors at a time when RBI is likely to cut interest rates further and stock markets are giving negative returns.
The IIFL Bonds offer highest interest rate of 10.50% p.a. for tenor of 69 months. It also offers 10.00% p.a. for short tenor of 15 months for the secured category. The bonds have monthly, quarterly and annual payment frequency along with zero coupon bonds. The other tenor offered is 39 months for secured category.. Corporates and Trusts, which are paying only MAT, can also invest in the bonds, especially 15 month tenor, where the rate is very attractive. Given the short term liquidity tightening, the 15 month bonds are well priced.10% interest rate for such entities becomes very attractive on a tax adjusted basis. No other similar instrument gives such returns.
CRISIL has rated the instrument as AA/Stable, which indicates that the instruments are considered to have a high degree of safety for timely servicing of financial obligations and carry very low credit risk.
The IIFL Bonds would be issued at face value of Rs 1,000 and the minimum application size is Rs 10,000 across all categories. The public issue opens on August 06, 2019 and closes on August 30, 2019, with an option of early closure. The allotment will be made on first come first served basis.
Mr. Gaurav Mishra, Director, IIFL Finance said, “Through our strong physical presence of 1,947 branches across India and a well-diversified portfolio, we are able to meet the credit requirement of various segments of underserved population. The funds raised will help us in expanding our operation in more such areas.”
The UK-based CDC Group backed IIFL Finance will issue bonds aggregating to Rs 100 crore, with a green-shoe option to retain over-subscription up to Rs 900 crore (aggregating to a total of Rs 1,000 crore).
IIFL Finance is a part of the IIFL Group, which has emerged as one of India’s largest retail-focused financial services companies. IIFL Finance’s Loan Assets under Management is about Rs 35,000 Crores. Most importantly, 85% of the book is retail – which is focused on small ticket loans.
IIFL Finance had a gross NPA of 1.9% and Net NPA of 0.6%. Total Capital Adequacy Ratio (CAR) stood at 19.2% at the end of March, 2019, including Tier I capital of 16.0%, as against the statutory requirement of 15% and 10% respectively. In FY19, IIFL Finance reported a profit after tax of Rs 717.4 crore, up 55% on year with a robust return on equity of 18.3%. It has strong relationship with multiple banks and financial institutions. Dependency on short-term borrowing sources which is typically Commercial Paper (CP) is quite less and the company has successfully navigated the dry down on the CP market since 2018 IL&FS crisis. CP as source of funds has reduced it from 24% at end of September 2018 to 12 % at the end of March 2019.