JM Financial Credit Solutions, the NBFC arm of the JM Financial Group, is all set to launch on Monday its first tranche of non-convertible debenture (NCD) issue. This maiden secured public offering by JM Financial Group is giving an attractive interest rate of up to 9.7 per cent per annum, and will be listed on BSE, thus providing liquidity to investors.

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JM Financial NCDs are of face value of Rs 1,000 each with a base issue size of Rs 300 crore with an option to retain oversubscription upto Rs 450 crore aggregating upto Rs 750 crore, The issue is within the shelf limit of Rs 2,000 crore i.e. the second and third tranche could be in offing too.

"Most likely, the second tranche will be launched during this financial year itself," said Shashwat Belapurkar, CEO, JM Financial Credit Solutions at a press conference in New Delhi.

The issue will be closed on June 20 and the allotment will be done on first come first serve basis.

“With this NCD, we are reaching out to retail investors to create a trust bond with them. We are a debt-averse firm with strong asset quality. The company has a track record of stable and sustainable financial performance reflected in our consistent growth in revenues and profitability,” said CEO Belapurkar.

Here are the details of the issue:

Objects of the NCD:

About 75 per cent of the net proceeds of the bond issue will be used for the purpose of onward lending, financing and for repayment/prepayment of interest and principal of existing borrowings of the company.

A maximum of up to 25 per cent will be used for general corporate purposes, the company said.

Issue Structure:

NCDs are available in 6 options with a tenure of 38 months, 60 months and 120 months. Minimum Rs 10,000 investment is a must.

In Option 1, interest will be paid on an annual basis at a rate of 9.25%; and the tenor is 38 months. The Effective Yield (per annum) is 9.26%.

In Option II, interest will be paid on a cumulative basis and the tenor is 38 months. The redemption amount per NCD is Rs. 1,323.39.

In Option III, interest will be paid on an annual basis at a rate of 9.50% and the tenor is 60 months. The Effective Yield (per annum) is 9.49%.

In Option IV, interest will be paid on a monthly basis at a rate of 9.11% and the tenor is 60 months. The Effective Yield (per annum) is 9.49%.

In Option V, interest will be paid on an annual basis at a rate of 9.75% and the tenor is 120 months. The Effective Yield (per annum) is 9.74%.

In Option VI, interest will be paid on a monthly basis at a rate of 9.34% and the tenor is 120 months. The Effective Yield (per annum) is 9.74%.

Rating:

The Tranche I Issue has been rated AA/Stable by ICRA and India Ratings. Double AA rating indicates indicate ‘High degree of safety’. The rating is a notch lower than AAA rated bonds that indicate an exceptional degree of creditworthiness because the issue can easily meet its financial commitments.

Allocation ratio:

Institutional portion: 20%, Non-institutional investors portion: 20%, High net-worth individuals (HNI): 30% and, Retail investors: 30%

Taxation rules:

The issue is being offered in a demat format, hence no TDS will be charged. However, investors would require declaring the income as income from other sources and pay tax as per their income tax slab.

About company:

The NBFC arm of JM Financial Group provides financial solutions to real estate developers with a focus on housing project financing. Its product portfolio consists of project finance, loans against property, loans against shares, project at early stage loans and loans against land.

In the year ended March this year, the company's loan book stood at Rs 7,338.88 crore, compared with Rs 5,658.1 crore in the year-ago period.