DHFL To Raise Rs 12,000 Crore Through Non-Convertibles
In order to cater the increasing demand for loans for affordable housing, Dewan Housing Finance (DHFL) is going to raise Rs 3,000 crore through a non-convertible debenture (NCD) issue. These equity issues will have subscription limit of up to Rs 9,000 crore, taking the total fundraising to Rs 12,000 crore. The company will use the funds for onward lending and for repaying existing borrowings. The issue is rated triple-A by Care Rating and Brickwork Rating.
Earlier, DHFL had raised $150 million by issuing masala bonds on the London Stock Exchange, making its debut listing in the international market. This has opened the affordable housing industry for foreign investors and has been described as the highest by a private issuer on the first day of a public bond sale.
DHFL reported profit of Rs 312 crore in the last quarter of FY18, with 0.96 per cent of gross non-performing asset as of March-end 2018. DHFL also recorded increase in the net revenue by 18 per cent to Rs 2,802 crore.
What is non-convertible debenture?
It is an instrument through which a company can raise money from the public by issuing a debt paper for a specified tenure along with fixed interest on the investment. This paper is called as debenture. These can be convertible if they can be converted into equity shares on maturity. A non-convertible issue does not have the option of conversion and on maturity, the principal along with interest is paid to the holder of the instrument. The average rate in last few years has been 11-12 per cent for NCDs. Also, these can be sold by the investors before the maturity.