Gold financing company Muthoot Finance has sought approval of the Securities and Exchange Board of India (Sebi) for raising up to Rs. 400 crore through non-convertible debentures (NCDs) to support lending activities.
NCDs are loan-linked securities issued by a company and cannot be converted into stocks. They usually carry a higher interest rate than a convertible debenture.
“Public issue by Muthoot Finance of secured redeemable NCDs and unsecured redeemable NCDs of face value of Rs. 1,000 each, aggregating up to Rs. 2,000 million with an option to retain over subscription up to Rs. 2,000 million for issuance of additional NCDs aggregating to a total of up to Rs. 4,000 million,” the prospectus stated.
The funds raised through the issue would be used for financing and lending activities and for general corporate purposes.
Muthoot Finance has already raised a total of Rs. 864 crore via two tranches through NCDs route in the current fiscal year (2014-15) so far.