Sachin Bansal's Navi Finserv to raise Rs. 600cr through NCDs
Sachin Bansal, co-founder of Flipkart, is set to raise up to Rs. 600 crore for his fintech start-up Navi Finserv through a new bond issue of Non-Convertible Debentures (NCDs). The bond issue will include a green shoe option of up to Rs. 300 crore to retain oversubscription, with the subscription period running from February 26, 2024 to March 7, 2024. Per Bansal, the funds raised would be utilized for onward lending, financing, loan repayment, and other general corporate purposes.
NCDs will have different tenures and effective yields
The NCDs will be available for tenures of 18, 27, and 36 months, offering effective yields ranging from 10.47% to 11.19% per annum. CRISIL has awarded an 'A' or stable rating to these NCDs. Bansal emphasized that Navi Finserv's tech-driven approach to financial products and services sets them apart, with its digital lending process driving business growth. The company's long-term focus is on leveraging technology to improve the customer experience and provide an integrated ecosystem of financial services.
Navi Finserv has previously raised capital through various means
The bond issuance marks the third time Navi Finserv has raised capital through secured, rated, and listed NCDs in the past two years. The company previously raised approximately Rs. 495 crore in FY2023 and Rs. 481 crore in FY2024 through its maiden public issue I and public issue II of secure, rated, listed, and redeemable non-convertible debentures under SEBI regulations.
What are NCDs and what are they used for?
Debentures are long term financial tools that companies issue to gather money from investors. Generally, these debentures aren't backed by collateral and as a result, the market reputation of the issuer takes precedence. Convertible debentures provide the option for conversion in the stock of the issuing company after a specified time. Non-convertible debentures or NCDs lack this facility. The green shoe option in NCDs means that the issuer can sell more debentures than initial declaration if the demand exceeds expectations.