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Nbfc

In: Business and Management

Submitted By zaid
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Shriram City Union Finance Limited (SCUFL)
Secured NCD Issue August 11, 2011

Shriram City Union Finance Limited, one of the largest small enterprise finance companies in India, has come up with its public issue of Secured Non Convertible Debentures (NCDs) aggregating upto Rs. 375 crore with an option to retain over-subscription upto Rs. 375 crore for issuance of additional NCDs aggregating to a total of upto Rs. 750 crore. The Issue is open from August 11, 2011 to August 27, 2011 (The Company has the option of closing the issue on an earlier date, once it receives the amount it has targeted). The company will be paying an interest ranging between 11.50% and 12.10% p.a. on these bonds. Given the current scenario of rising interest rates in Indian debt markets where rates are expected to be close to their peak levels, the issue provides an opportunity to lock in attractive returns for a period of 3-5 years. This issue offers better interest rates compared to other alternatives though with slightly lower credit rating. Further, given its unique business model, decent financial history, reasonable credit rating and safety (Secured NCDs are 100% secured by assets of the company), investors comfortable with primary market offerings can participate in this issue (low to medium risk, medium - long term investment). If convinced, the investor needs to apply at the earliest as allotment is to be made on first come first serve basis. Investors can also look at NCDs of companies already listed on the exchanges that offer higher safety in terms of credit rating and similar or slightly lower interest rates. A table of such NCDs is pasted below in this note. Objects of the Issue: The funds raised through this Issue, after meeting Issue expenses, will amongst others, be used for Shriram City's various financing activities including lending and investments. The funds would also...

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