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Navi Finserv, a wholly-owned subsidiary of Sachin Bansal's Navi Technologies, will be raising Rs 600 crores through an NCD issue that opens today.
Non-Convertible Debentures or NCDs are fixed-income instruments that are often used by large mature companies to raise long-term capital. These debentures cannot be converted into equity shares at the time of maturity and receive fixed interest from the issuing company.
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They are of two types: secured and unsecured. Secured NCDs are debentures that have the backing of certain assets of the company and are given preference in case of liquidation. Unsecured debentures are not backed by any assets but receive higher interest to mitigate the added risk.
Navi Finserv is a systemically, non-deposit-taking NBFC registered with RBI. It was incorporated on 14th February 2012 and is a wholly-owned subsidiary of Navi Technologies. It offers financial products like personal and home loans under the 'Navi' brand, serving around 84% of India's pin codes.
The company has a goal of meeting the borrowing needs of middle-income people and aims to be a Pan India financial services company and provide a range of financial products and services. The company had a standalone net worth of Rs 1,189.57 crores on 31st December 2021.
The company announced the issue on 16th May 2022. "This is almost like a record that is being created that a young company like ours is able to create a debt public issue, something that is usually associated with large mature organizations," said Sachin Bansal, Founder, and Chairman of Navi Technologies.
The Face Value of these bonds is Rs 1,000 each with a minimum lot of Rs 10,000. These are secured NCDs and are available with tenures of 18 or 27 months, carrying interest rates of 9.20% to 9.77%. The issue will be open till 10th June and allotment is expected to take place on 16th June. They are rated 'A' or stable by credit rating agencies and are expected to be listed on both NSE & BSE by 20th June 2022. A.K. Capital Services & JM Financial are the lead managers of the issue while HDFC is the banker.
Recently, Navi Technologies appointed Meesho co-founder & CEO as an independent director on its Board. Recently, the RBI rejected Navi's application for a banking license, saying that they were “not found suitable”. This is a big blow to Bansal but the company is planning to continue with its IPO which is set to hit the markets by the end of 2022.
Article by Aman Agarwal.
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