NCD issue: Religare Finvest unfazed by 'investor fatigue'

NCD issue: Religare Finvest unfazed by 'investor fatigue'

A slew of debt issues that have hit the market in the past few weeks won't affect the ongoing public issue of secured redeemable, cumulative non-convertible debentures (NCDs) of Religare Finvest Ltd (RFL) that opened on September 14 and closes on September 27, 2012, according to one of the lead managers.

“We don’t think that people are hit by investor fatigue; also the returns from the stock markets in the recent past have been spectularly unrewarding. We don’t see a problem with regard to this issue,” said Sanjoy Datta, Managing Director, JM Financial Institutional Securities Private Ltd, at a press meet addressed jointly with executives of RFL.

RFL plans to raise Rs 250 crore, with an option to retain an equal amount in case of over-subscription. The NCDs, with a face value of Rs 1,000 each carry an interest rate of  12.25 per cent for tenors starting three years and one day to six years.

RFL, whose loan portfolio comprises lending to small medium enterprises (SMEs) to about 70 per cent, has factored in the slowdown in the economy as reflected in the results declared by many companies and tightened its lending norms to SMEs. The Chief Risk Officer and President of RFL, Kanchan Jain said, “We believe that the operating environment is challenging and have adjusted our underwriting policies accordingly.”

On the fallout of the Rs 101.90 crore loan to Deccan Chronicle Holdings Ltd (DCHL), one of its top 20 borrowers, getting declared as NPA, she declined to comment beyond disclosures mentioned in the offer document filed with market regulator Sebi. The document acknowledged that interest on the loan to DCHL is overdue and refused to assure investors that it will be able to recover the interest along with the principal amount.

The loan, according to document, is secured by a collateral package comprising certain assets of DCHL, its promoters including property of DCHL, shares pledged by the promoters