IIFL Finance, a prominent non-banking financial company (NBFC) based in Mumbai, has successfully raised $325 million via an international bond issuance. The bonds carry a coupon rate of 8.75% and have a tenure of three and a half years.
Strategic Move Amidst Regulatory Changes
This fundraising initiative comes in the wake of the Reserve Bank of India’s (RBI) decision to lift restrictions on IIFL Finance’s gold financing operations in September 2024. The removal of these constraints has enabled the company to explore diverse funding avenues to bolster its growth trajectory.
Robust Investor Interest
The bond issuance witnessed substantial investor interest, with peak demand reaching $1.15 billion. The final order book stood at over $730 million, distributed across various regions:
- Asia: 20%
- Europe, the Middle East, and Africa: 25%
- United States: 54%
Notably, 95% of the issuance was subscribed by fund managers, while private banks and insurance companies accounted for the remaining 5%.
Credit Ratings and Financial Prudence
The bonds have been assigned a B+ rating with a stable outlook by both S&P and Fitch, reflecting the company’s creditworthiness and adherence to prudent financial practices. IIFL Finance emphasized that this issuance allows for diversification of funding sources and reinforces its commitment to delivering value to stakeholders.
Deployment of Funds
The proceeds from the bond issuance are earmarked for on-lending purposes, supporting IIFL Finance’s expansion plans and enabling the company to cater to a broader customer base. This strategic move aligns with the company’s objective to strengthen its market position and enhance financial inclusion.
Industry Context
IIFL Finance’s successful bond issuance follows a trend among Indian NBFCs tapping into global debt markets to diversify their funding sources. Recently, Tata Capital raised $400 million from overseas investors, indicating strong investor confidence in India’s financial sector.
Conclusion
The $325 million raised through this international bond issuance marks a significant milestone for IIFL Finance, enabling the company to pursue its growth objectives while maintaining financial stability. The overwhelming investor response underscores the robust demand for quality issuances from Indian NBFCs in the global market.
