Muthoot Finance Limited (MFL), the flagship company of the Kerala-based business house The Muthoot Group, is in the market to raise upto Rs 1000 crore through a public issue of secured Non-Convertible Debentures (NCDs). Muthoot Finance is Indiaâ€™s largest gold loan focussed NBFC and its equity shares are listed on stock exchanges. The NCDs being offered can deliver annual interest of 7.15% to 7.75% to HNIs and retail investors. Read on to know more.
NCD issue details
The base issue size is Rs 100 crore, with an option to retain oversubscription of Rs 900 crore. Total funds that can be raised from the issue is Rs 1000 crore.
Each NCD costs Rs 1000.
Muthoot Finance’s NCD issue is open till January 5, 2021. There may be early closure.
Minimum application amount would be Rs 10,000.
The NCDs will be listed on BSE within 6 working days from the issue closing date.
Interest and options
There are 6 options.
1. Monthly – 38 months tenure – 7.15% per annum (base rate of 6.75% + 0.40% incentive)
2. Annual – 38 months – 7.40% per annum (including incentive)
3. Monthly – 60 months – 7.50% per annum (including incentive)
4. Annual – 60 months – 7.75% per annum (including incentive)
5. Maturity payment – 38 months – Rs 1 lakh investment can become Rs 1.25 lakh
6. Maturity payment – 60 months – Rs 1 lakh investment can become Rs 1.45 lakh.
NCD safety, ratings
The NCDs proposed to be issued under this offering have been rated [ICRA] AA (Stable) by ICRA, and have been rated CRISIL AA/Positive by CRISIL.
The rating of the NCDs by ICRA and CRISIL indicates high degree of safety regarding timely servicing of financial obligations.
Do remember the rating provided by ICRA and CRISIL may be suspended, withdrawn or revised at any time by the assigning rating agency and should be evaluated independently of any other rating.
Security of NCDs
The claims of the secured NCD holders are superior to the claims of any unsecured creditors, subject to applicable statutory and/or regulatory requirements).
The secured NCDs will be secured by way of first pari passu charge on current assets, book debts, loans and advances, and receivables including gold loan receivables, both present and future, of Muthoot Finance company, by way of hypothecation.
Interest income on NCDs is taxable at your slab rate whether on pay-out or under the cumulative option. If you sell the bond in the exchanges in less than a year, short-term capital gains, at your tax slab, will be applicable. If you sell after a year of holding, then long-term capital gains tax without indexation will apply.
How to apply
An eligible investor desirous of applying in the NCD issue can make applications only through the Applications Supported by Blocked Amount (ASBA) process.
Category III or High Net-worth Individual Investors (“HNIs”) can apply for an amount aggregating to above Rs 10 lakh across all options of NCDs in the issue.Â Category IV or Retail Individual Investors can apply for an amount aggregating up to and including Rs 10 lakh across all options of NCDs in the issue.
Please note that there is a single application form for all applicants.
If you would like to subscribe to Muthoot Finance NCDs, contact Wealthzi team atÂ [email protected]Â or open an account atÂ www.wealthzi.com.