Arka Fincap, a subsidiary of the Kirloskar group, revealed its plans to launch a public issue of non-convertible debentures (NCDs) worth Rs 300 crore said on December 5, 2023. The NCDs, with a face value of Rs 1,000 each, present an enticing investment opportunity for the public.
The base issue size for this offering is set at Rs 150 crore, accompanied by a green shoe option of Rs 150 crore in case of oversubscription. Arka Fincap has structured its non-convertible debentures (NCDs) into three distinct maturity terms: two years, three years, and five years. The company announced that the NCDs will be listed on the Bombay Stock Exchange (BSE), adding to the appeal for potential investors.
Amit Gupta, the Group Chief Financial Officer at Arka Fincap, addressed the impact of the Reserve Bank of India’s stringent regulations on unsecured lending. He mentioned a modest expected increase of 5-10 basis points in the company’s borrowing costs due to these regulations. However, Gupta assured that this marginal cost adjustment would be passed on to customers.
Vimal Bhandari, CEO of Arka Fincap, emphasized the company’s commitment to a well-diversified funding profile, highlighting strong liquidity management, credit rating, and brand equity. He stated that the public issue of NCDs aligns with the company’s strategy of liability diversification.
Of the funds generated from this Tranche I Issue, a minimum of 75% will be allocated for onward lending, financing, and the repayment of interest and principal for the company’s existing borrowings. The remaining portion is earmarked for general corporate purposes, according to a company press release.
The company offers structured-term financing solutions across four sectors, encompassing corporate lending, real estate and urban infrastructure financing, MSME lending, and personal lending. As of September 30, the company’s loan book amounted to Rs 4,033.19 crore.
