Piramal Enterprises, a non-banking financial company (NBFC), opened its inaugural non-convertible debenture (NCD) issue on Thursday, October 19. This NCD offering, set to raise ₹1,000 crore, is referred to as 'Tranche I' and caters to a wide array of investors with varying risk appetites. The issue has a greenshoe option allowing for an additional ₹800 crore investment.
The mentioned
NCD will conclude on Thursday, November 2. However, it must be noted that early closure or extension may be possible, in adherence to the Securities and Exchange Board of India Issue and Listing of (Non-Convertible Securities) Regulations 2021,
Piramal Enterprises said.
The objective of the issue
Piramal Enterprises intends to utilise the net proceeds from this issue as follows:
75% of the raised amount will be allocated for onward lending, financing, and the repayment/prepayment of existing borrowings.
The remaining 25% of the funds will be dedicated to general corporate purposes.Tenure choices
The
NCD comes with four tenure options: two years, three years, five years, and ten years.
Each tenure offers different yield (return) rates, ranging from 9% to 9.34% per annum.
Coupon rates
| Series 1 | Series 2 | Series 3 | Series 4 |
|---|
| Frequency of Interest Payment | Annual | Annual | Annual | Annual |
| Nature | Secured | Secured | Secured | Secured |
| Tenor | 2 Years | 3 Years | 5 Years | 10 Years |
| Coupon (% per Annum) | 9.00% | 9.05% | 9.20% | 9.35% |
| Effective Yield (% per Annum) | 9.00% | 9.05% | 9.19% | 9.34% |
| Amount on Maturity | ₹ 1,000.00 | ₹ 1,000.00 | ₹ 1,000.00 | ₹ 1,000.00 |
Listing
The NCD will be listed on both BSE and the National Stock Exchange (NSE), with the BSE designated as the primary stock exchange.
Credit ratings
The NCD has received credit ratings of
Investment minimums and multiples
For prospective investors, the minimum application size is set at ₹ 10,000, equivalent to 10 NCDs. Subsequent investments are allowed in multiples of ₹ 1,000, equal to 1 NCD.
Lead managers and trustees
Leading the issuance are AK Capital Services Limited, JM Financial Limited, Nuvama Wealth Management Limited, and Trust Investment Advisors Private Limited. IDBI Trusteeship Services Limited is the Debenture Trustee, and Link Intime India Private Limited serves as the registrar to the issue.
Should one invest?
This NCD looks like an appealing income opportunity, however, it's crucial for potential investors to weigh the pros and cons before committing their funds. The credit rating is an indicator of safety, which is paramount in investments. Additionally, the offered interest rates are competitive compared to similar-rated NCD issues, providing potential for decent returns.
However, it's important to understand that all NCD issues, even those with decent ratings, carry some degree of credit risk. It's essential to acknowledge this risk, as past instances have shown that even highly rated NCDs can default.
Additionally, NCDs may not be as liquid as other investment options, like stocks and fixed deposits. This means selling NCDs before maturity could be challenging. Also, investors should be mindful of taxation, as interest earned on these instruments is taxed at the income tax slab rate.
