Should You Buy When Vivriti Capital Raises Rs 500 Cr Through Non-Convertible Debentures On August 18? Study More

On August 18, Vivriti Capital, an NBFC, launched its maiden public offering of non-convertible debentures (NCDs), with a target financing of Rs 500 crore. If the public offering is completely subscribed, an early close option exists on August 31.

The NCDs have a base issue size of up to Rs. 250 crore and the option to retain oversubscription up to an additional Rs. 250 crore. They are secured, graded, listed, and redeemable. A minimum of 10 NCDs across all series may be applied for, followed by multiples of 1 NCD.

The NCD Proposal

The five different forms of NCDs have different tenures and interests. They are, for instance, offered in 18-month and 24-month durations. The ‘Series V’ NCDs with a 24-month term and yearly payments provide the highest coupon rate of 10.50% annually. Effective yields on these debt securities are predicted to range from 9.98% to 10.48%. Investors may earn 9.57% annual interest on the ‘Series I’ 18-month NCD with monthly coupon payments.

Other choices include of:

Series II: 18-month term, 10% coupon rate, and yearly coupon payments

Series III: A 24-month term, a 9.65% coupon rate, and quarterly coupon payments

Series IV: A 24-month term with monthly coupon payments at a 10.03 percent coupon rate

For NCDs, the minimum application size is Rs 10,000 for all series combined, with subsequent multiples of Rs 1,000.

Issued by Vivriti Capital Are NCDs

Non-convertible debentures, or NCDs, are debt financial instruments issued to raise money for a particular purpose that are secured against the company’s assets. As an example, Vivriti Capital plans to use at least 75% of the net proceeds for lending, financing, and repaying debt. It states that up to 25% will be utilized for general costs.

Vineet Sukumar, the founder and managing director of Vivriti Capital, claims that the business offers financing solutions to more than 194 mid-corporates and has a portfolio of Rs 5,835.80 crore.

NCDs are listed securities even if there is no opportunity for conversion to equity. Therefore, before maturity, investors may sell them on the secondary market.

Although these NCDs have greater interest rates than bank fixed deposits, there is less credit risk associated with NCD investing. As of June 12, 2023, the NCDs have a “CARE A; Positive” rating from the credit rating company CARE Ratings. CARE states issuers with this grade are deemed to have enough safety about the prompt fulfillment of financial obligations, even if it falls short of CARE AAA and CARE AA. Investors in fixed income who are willing to take on more risk in exchange for better returns should think about incorporating NCDs in their portfolios.