Shriram City Union Finance plans to raise up to Rs 400 crore in debt capital by issuing bonds on a private placement basis.
On Wednesday, the company's Banking and Securities Management Committee approved the issuance of secured and listed redeemable bonds with a basic issue size of Rs 200 crore and a green shoe option of up to Rs 200 crore, for a total of Rs 400 crore.
Shriram City Union Finance (SCUF) stated in a regulatory filing that the bonds will be in the nature of principal protected market-linked non-convertible debentures (PP-MLDs) with a face value of Rs 10 lakh apiece.
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The funding comes ahead of the company's merger with group company Shriram Transport Finance Company (STFC), which is expected to be finalised by the third quarter of this year.
The combined firm will be known as Shriram Finance Ltd, and it would be the country's largest retail non-banking finance company. The money will be raised through a private placement in one or more tranches.
Market Linked Debentures (MLDs) offers are market-linked and the returns that are not fixed.
The returns are determined by an underlying index, such as an equity benchmark, government yield, or gold index. Principle-protected MLDs ensure that an investor will receive at least the principal amount upon maturity, which generally ranges from 13 to 60 months.
Stock of Shriram City Union Finance was trading at Rs 1945.55 apiece on BSE.
