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Mumbai-headquartered NBFC Magma Fincorp Ltd is planning to raise Rs 1,000 crore through non-convertible debenture (NCD) issues in this fiscal, with the company intending to raise Rs 500 crore immediately through its first tranche. The second tranche, wherein the firm will raise another Rs 500 crore, would follow later.
The first tranche (Rs 500 crore) comprises a base issue of Rs 200 crore and a greenshoe option of Rs 300 crore. This is the company’s first public issue of secured redeemable NCDs, which will open on April 8 and close on May 8 (with an option of early closure or extension).
“We are in the lending business and money is the raw material for us. This issue will help us to boost our long-term working capital needs as this issue is for three tenures – 3 years, 5 years and 10 years – and will be deployed across our three lines of businesses, depending upon the demand appetite,” Sanjay Chamria, Vice Chairman and Managing Director at Magma Fincorp said.
The company’s business lines are vehicles (passenger vehicles, trucks, buses, construction equipment and tractors), affordable housing and unsecured Small and Medium Enterprises (SME) lending. In FY19, all these three sectors had grown by more than 20 per cent and the firm expects this growth to continue in FY20 also.
The NCDs offered through the first tranche would be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Edelweiss Financial Services Ltd and A K Capital Services Ltd are the lead managers to the issue.
“This is the maiden issuance of NCDs by Magma to the retail investors. So far, we have done plenty of NCD issues but all to institutional investors. So we also want to see the response and how does the retail franchise look like and accept Magma as a name,” Chamria said, adding, the second tranche would be based on the success of the first issuance.
Magma Fincorp, which historically has been dependent on banking institutions and mutual funds for funding needs, is looking at diversifying the mix due to the volatility in the last six months. The firm would now look at retail issuance, foreign currency borrowings and co-lending options among others.
The NBFC, which has 309 branches across 22 states, employs a close to 10,000 personnel and it intends to add another 700-1,000 people in this fiscal.
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