Muthoot FinCorp’s ₹400 crore NCD opens for subscription: Check issue size, effective annual yield & more

Muthoot Pappachan Group’s subsidiary, Muthoot FinCorp, has launched the fourth tranche of its secured, redeemable, non-convertible debentures (NCDs). The subscription process for the Tranche IV of Muthoot FinCorp NCD is already underway. An NCD is an investment instrument that provides a fixed income over a period of time.

NCD issue date and time

The subscription window for Muthoot FinCorp NCD Tranche IV, which opened on February 4, will remain available till February 17. However, the company may go for early closure of NCD up on board approval.

“The Tranche IV Issue shall remain open for subscription on working days from 10 am to 5 pm (Indian Standard Time) during the period indicated in the Tranche IV Prospectus, except that the Issue may close on such earlier date or extended date as may be decided by the Board of Directors of our Company or the Stock Allotment Committee,” the company said.

The record date for interest payment on the NCDs or repayment of principal will be 15 days before the date on which interest is due and payable and/or the date of redemption.

Offer details

Muthoot FinCorp aims to raise ₹400 crore through the issuance of Tranche IV of the NCDs, which is within its ₹2,000 crore shelf limit. The company has fixed the base size of the issue at ₹100 crore, with the face value of each NCD at ₹1,000. The green shoe option, or the option to retain an oversubscription amount, is ₹300 crore.

CRISIL Ratings has assigned the Muthoot FinCorp NCDs an AA-/Stable rating, indicating that Tranche IV is highly secure regarding the timely servicing of its financial obligations.

Investors are required to buy a minimum of 10 NCDs and multiples of 1 thereafter for applying in the offer. This takes the minimum investment in the issue to ₹10,000

The deemed date of allotment for the issue is Friday, February 21. The NCDs on offer are proposed to be listed on the debt market segment of the Bombay Stock Exchange (BSE), giving liquidity to its investors.

Interest rates and tenures

Muthoot FinCorp NCDs will offer investors an effective yield of 9.38% to 10.11%, depending on their tenure selection. This NCD offers tenures of 18 months, 24 months, 36 months, 60 months, and 72 months.

Objective of the NCD offer

In its Tranche IV prospectus, Muthoot FinCorp said that the NCDs funds will be used for onward lending and financing and repayment and prepayment of interest and principal of the company’s existing borrowings. The company will use at least 75% of the funds for this purpose.

Up to 25% of the proceeds generated through the issue will also be used for general corporate purposes, the company added.

How to apply for Muthoot FinCorp NCD

Both retail investors and non-institutional investors are eligible to apply for the NCDs. Retail individuals may apply through intermediaries, and investments up to ₹5 lakh must be done through UPI to block the funds.

One can also apply through SCSBs and stock exchange platforms. The application can further be done via the website of Muthoot FinCorp, the Muthoot FinCorp ONE app and physically by filling out a form at any of the company's branches.