OnMobile Global has raised ₹65 crore through private placement of secured Non-Convertible Debentures (NCDs) with tenures up to 36 months. The issuances carry high coupon rates of 13.60% and 13.88%. A significant watch point is the pledge of 100% shares of its Singapore subsidiary.
OnMobile Global Raises ₹65 Crore Through Non-Convertible Debentures
OnMobile Global has successfully raised ₹65 crore through the private placement of secured Non-Convertible Debentures (NCDs), with tenures extending up to 36 months.
What Just Happened
The company has issued two series of NCDs: Series A Debentures worth ₹40 crore with a 13.60% annual coupon, and General NCDs worth ₹25 crore with a 13.88% annual coupon. The maturity date for these NCDs is July 5, 2029.
Why This Matters
This fundraising provides OnMobile Global with necessary capital, but the high interest rates signal a significant cost of borrowing. The pledging of 100% shares of its subsidiary, OnMobile Singapore PTE. LTD., is a key factor to monitor, as it impacts the group's financial flexibility and prioritizes debt holders.
The Backstory
OnMobile Global is a player in the digital entertainment and mobile gaming space, often seeking funding for its operations and expansion.
What Changes Now
The company gains immediate capital infusion, but the increased debt burden and the encumbrance on its subsidiary's shares will require careful financial management. The company will need to service these high-interest debts over the next 36 months.
Risks to Watch
- High Debt Cost: Coupon rates of 13.60% and 13.88% represent a substantial interest expense.
- Asset Encumbrance: The pledge of 100% of OnMobile Singapore shares limits future strategic options for that subsidiary.
- Default Penalties: Stringent penalty clauses of 2% per month/annum could impact liquidity in case of non-payment.
Peer Comparison
Interest rates on debt instruments can vary based on company credit profiles and market conditions. OnMobile Global's rates appear elevated, suggesting a premium demanded by investors for the perceived risk.
Context Metrics
- Total Fundraise: ₹65 crore
- Series A Issue Size: ₹40 crore
- General NCD Issue Size: ₹25 crore
What to Track Next
Investors should monitor OnMobile Global's financial performance to ensure it can meet its interest payment obligations. The company's strategy regarding its Singapore subsidiary will also be a key area to watch.