JAIPRAKASH Associates has raised Rs 1,000 crore through issue of non convertible debentures (NCDs) to Standard Chartered India and plans to raise another Rs 1,000 crore through NCD route in the October-December quarter, a senior company executive, who didn’t want to be named, said.
The Delhi-based diversified firm, which has interests in cement, construction, expressways, hotels and real estate businesses, has issued NCDs with a five year-term and a coupon rate of 11.5%. The company executive who shared the information about the funds being raised didn’t specify how the money would be utilised.
While announcing its earnings for the quarter ended March, three months ago, Jaiprakash Associates had said it planned to raise $400 million through NCDs. The company originally wanted to publicly list NCDs, but later decided to go in for private placement to StanChart.
NCD is a financial debt instrument that can be privately placed with one or more institutional lenders or offered to investors at large and listed at a stock exchange where it can be freely traded. It is considered a less expensive option to raise capital for companies. Investors who subscribe to the NCDs get a rate of
interest which is usually 100-200 basis points higher than prevailing market rates, making it an attractive investment option.
Over the last few months, several companies have taken the NCD route to raise funds. Tata Motors has raised Rs 4,200 crore through an issue of nonconvertible rupee debentures to part repay the $3 billion bridge loan taken for acquiring Jaguar Land Rover. Similarly, serial entrepreneur C Sivasankaran’s Siva Ventures has raised Rs 435 crore by issuing secured redeemable NCDs.
Among others, mortgage lender HDFC has announced plans to raise Rs 4,000 crore through an NCD issue. L&T, Dewan Housing Finance and Shriram Transport Finance are also likely to raise debt through NCD issues. This is second fund-raising by Jaiprakash Associates in a month. Just a month ago, it mopped up Rs 500 crore through sale of treasury shares. The treasury shares were created as a result of a merger of four subsidiaries of Jaiprakash Associates with the parent firm.
Out of the sale proceeds of the treasury stock, Rs 300 crore would be used as equity in the group company that is developing country’s first formula 1 car racing track in Greater Noida.
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