Cholamandalam Investment and Finance Company (Chola Invest) has announced that it plans to raise Rs. 5,000 crore through the issuance of Non-Convertible Debentures (NCDs). The NCDs will be issued in multiple tranches, and the proceeds will be used to support the company’s growth plans.
Chola Invest is a leading non-banking financial company (NBFC) in India, with a focus on providing finance for commercial vehicles, construction equipment, and small and medium enterprises (SMEs). The company has a strong track record of growth and profitability and has been able to maintain its financial stability despite the challenges posed by the pandemic.
In a statement, Chola Invest said that the NCDs would be issued in one or more tranches, with a tenor of up to 10 years. The NCDs will be listed on the BSE and NSE, and the funds raised will be used to support the company’s growth plans.
“We are pleased to announce our plans to raise Rs. 5,000 crore through the issuance of NCDs. The funds raised will be used to support our growth plans, including expanding our lending portfolio, strengthening our digital capabilities, and enhancing our distribution network,” said Arun Alagappan, Managing Director of Chola Invest.
The NCDs will be issued in dematerialized form, and investors will have the option of choosing between a secured and unsecured NCD. The secured NCDs will be backed by specific assets of the company, while the unsecured NCDs will not have any specific security.
The NCDs will be offered to institutional and retail investors, with a minimum investment of Rs. 10,000. The interest rate on the NCDs will be determined at the time of issuance and will be paid out on a periodic basis.
The issuance of NCDs is a common method used by companies to raise funds from the market. NCDs are debt instruments that offer a fixed rate of return to investors and are not convertible into equity shares. NCDs are generally considered to be less risky than equity shares and offer a predictable stream of income to investors.
Chola Invest has a strong track record of issuing NCDs, and the company has been able to raise funds at attractive rates due to its strong financial position and credit rating. In February 2021, Chola Invest had raised Rs. 400 crore through the issuance of NCDs, which was oversubscribed by more than two times.
The announcement of the NCD issuance comes at a time when the Indian economy is showing signs of recovery after the pandemic-induced slowdown. The Indian government has also announced several measures to support the economy, including a Rs. 6 lakh crore National Monetization Pipeline (NMP) that aims to monetize assets such as highways, airports, and railways.
The NCD issuance by Chola Invest is expected to be well-received by investors, given the company’s strong financial position and growth prospects. The company has a strong presence in the commercial vehicle financing segment, which is expected to see strong demand in the coming years due to the revival of economic activity. The company is also well-positioned to take advantage of the growing demand for financing from MSMEs in India. With an experienced management team, sound corporate governance practices, and strong financial metrics, investors are likely to find Chola Invest’s NCD offering attractive. As always, we advise potential investors to carefully assess their own risk appetite before investing
In conclusion, the issuance of NCDs by Chola Invest is a positive development for the company and the Indian economy as a whole. The funds raised will be used to support the company’s growth plans and contribute to the overall economic recovery. The issuance is expected to be well-received by investors, given the company’s strong financial position and track record of growth and profitability.
