Religare Finvest to come up with a public issue of NCDs

Religare Finvest, a subsidiary of Religare Enterprises Ltd, is coming up with a public issue of NCDs. The company, which focuses on small and medium enterprises (SME) and retail capital market financing, will offer secured, redeemable NCDs of Rs 1,000 each, aggregating Rs 250 crores, with an option to retain oversubscription upto Rs 250, totaling Rs 500 crores. Allotment will be on a first come first serve basis. The issue opens on September 14.

The NCDs have five options

Option I and II: NCDs have a tenure of 36 months and 1 day. Under option 1 you can receive interest of 12.25% annually. If you go for the cumulative option, Rs 1,000 becomes Rs 1414.36.
Option III and IV: NCDs have a tenure of 60 months. Under option III you can get annual interst an interest of 12.50%. If you go for the cumulative option Rs 1,000 becomes Rs 1802.03.
Option V: This is a cumulative option, with a tenure of 72 months. Rs 1,000 invested doubles to Rs 2,000 on maturity giving you a yield of 12.62%.

The NCDs have been rated 'CARE AA-' by CARE and '[ICRA] AA-(negative)' by ICRA. The minimum amount of investment is Rs 10,000.

Why should you apply: The NCDs are secured and offer you a period ranging from 3 years to 6 years for investment. You also have the choice to receive income on a monthly basis.

Why shouldnt you apply: The company is in capital market financing which is a higher risk activity. Also, NCDs are typically illiquid and thinly traded. If you want to sell them, there may may not be many takers in the secondary market.