Edelweiss Financial Services (EFSL) is one of India’s leading financial services conglomerates. It offers a robust platform to a diversified client base across domestic and global geographies. Edelweiss announced that it will issue secured redeemable Non-Convertible Debentures (NCDs) to raise an amount of ₹200 Crore. The base size of the issue is ₹100 crore, with an option to retain over-subscription up to ₹100 Crore, the company said in a release.
The bonds will provide an effective cumulative yield of 9.95 percent per annum for a period of 120 months, 9.35 percent per annum for 46 months duration, and up to 9.80 percent per annum for 60 months tenure. For the proposed issue, an additional incentive maximum of 0.2 percent per annum will be given for all categories of investors. They are also the holders of previously issued bonds of the company or its group of companies, which includes ECL Finance, Edelweiss Housing Finance, Edelweiss Retail Finance, and Edelweiss Finance and Investments. Otherwise the equity shareholders of Edelweiss Financial Services are considered, the release said.
The company said that 75 percent of the funds raised through the issue of bonds will be used for repayment /prepayment of interest and principal of its existing borrowings and the balance is suggested to be used for general corporate purposes, subject to such utilizations which does not exceed 25% of the amount raised in the Issue, in connection with SEBI regulations. The issue will get opened on December 23, 2020, and close on January 15, 2021, with an option of early closure, it said. The different rating agency has rated the offering. Care Rating rated as CARE A+ with a stable outlook, whereas Brickwork Ratings, India Private has rated as BWR AA_/stable.
However, experts have taken a cautious pose against this. Kirtan Shah, Chief Financial Planner at Sykes and Ray Equities (I) Ltd, and a mutual fund distributor said that though the outlook is stable, an A rating means there is credit risk. Refinancing loans is currently more common because of the reduced interest rates, but there is no advantage for 10 years of investing for over 3 years. Someone who understands about credit risk can park in for 3 years and the rest it’s an avoid.
