ECL Finance Ltd, Edelweiss Financial Services’ NBFC arm, announced a public issue of unsecured redeemable non-convertible debentures aggregating to ₹200 crore. The company has the option to retain oversubscription of up to ₹200 crore taking the total issue size to ₹400 crore. The NCDs are in the nature of subordinated debt with a face value of ₹1,000 each and a tenor of 70 months. Subordinated debt instruments are those that get paid after all holders of senior debt instruments are paid off in the event of a default. Hence, these are considered riskier.

The NCDs offer an interest rate of 12 per cent a year with monthly, annual and cumulative options. The effective yield in the monthly option works out to 12.68 per cent for 70 months tenor while under the cumulative option, investors will get 2.01 times the invested amount on maturity.

Rashesh Shah, Chairman & CEO, Edelweiss Financial Services, said, “NCDs with their attractive returns offer a better yielding opportunity for retail investors among the other comparable options in debt. Every investor should have diverse investments which include debt and other asset classes. NCDs also provide liquidity as they are listed on the stock exchanges.”

The proceeds would be deployed for lending, investments, repaying existing loans, undertaking capital expenditure and for working capital requirements. The NCD has been rated AA (Double A) by both CARE and Brickworks.

Axis Capital and Edelweiss Financial Services are the lead managers to the issue. The issue opens on June 17 and closes on July 2.

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