Poonawalla Fincorp Secures Funding with Allotment of Non-Convertible Debentures

Poonawalla Fincorp Limited (PFL), a prominent player in the Indian financial services sector, has announced a strategic move to bolster its financial resources. On April 8, 2024, they informed the stock exchanges BSE and NSE about the approval and allotment of Non-Convertible Debentures (NCDs) through a private placement.

Understanding the Instrument

• Non-Convertible Debentures (NCDs): These are debt instruments issued by companies to raise capital. Unlike convertible debentures, NCDs cannot be converted into company equity shares. Investors receive periodic interest payments on their investment and the principal amount upon maturity.
• Secured, Redeemable, Rated, Listed: PFL’s NCDs hold several key features. They are secured, meaning they are backed by a specific set of assets that act as collateral in case of default. These NCDs are also redeemable, indicating that investors will get their principal amount back on a predetermined date.

Details of the Allotment

• Issue Size: PFL has issued 7,500 secured, redeemable, rated, listed NCDs, each with a face value of ₹1 lakh. This translates to a total issue size of ₹75 crore (₹750 million).
• Private Placement: The NCDs have been allotted through a private placement, signifying that they were offered to a select group of institutional investors rather than being available to the general public. This approach allows PFL to target specific investors with the financial capacity and risk appetite suitable for this type of investment.
• Security and Charge: The obligations under the NCDs are secured by a first-ranking pari passu charge on the Hypothecated Properties. This essentially means that these specific assets will be used to repay investors in case PFL defaults on its obligations. The value of these properties should be sufficient to cover the total issue size of the NCDs, providing a layer of security for investors.

Conclusion

Poonawalla Fincorp’s allotment of NCDs highlights its commitment to securing long-term financing for strategic growth initiatives. The specific features of these NCDs, including their secured nature and proposed listing on a stock exchange, offer potential benefits to both PFL and the investors who participate in this private placement.

About Poonawalla Fincorp Limited

Poonawalla Fincorp Limited is a non-deposit-taking NBFC registered with RBI. It provides consumer and MSME financing and General Insurance Services.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.