Persistent Systems has successfully allotted Non-Convertible Debentures (NCDs) worth Rs 7,000 crore via private placement. The issuance, carrying an 8.95% annual coupon, is structured across six series with tenors ranging from two to five years. While a portion of the debt is backed by asset charges and share pledges, some series remain unsecured, marking a significant move to raise long-term capital for the IT services firm.
Persistent Systems Completes Rs 7,000 Crore NCD Issuance
Persistent Systems has completed the allotment of 700,000 Non-Convertible Debentures (NCDs) with a total value of Rs 7,000 crore. The instruments carry an annual coupon rate of 8.95% and were issued through a private placement.
Reader Takeaway: The NCD issuance secures long-term capital but adds significant interest obligations to the company's financial profile.
What just happened
The Special Committee of the Board of Directors approved the allotment of these NCDs, each with a face value of Rs 1 lakh. The issuance is divided into six series, with tenors ranging from 2 to 5 years. Series 1 and 2 account for Rs 3,000 crore, while the remaining balance is distributed across the other four series maturing between 2030 and 2031.
Security and Collateral
The company has implemented a tiered security structure. Series 1, 2, 5, and 6 are backed by a first-ranking exclusive fixed charge over a designated proceeds account. Additionally, these are supported by share pledges related to the merger involving Galaxy Germany Holding SE and Nagarro SE, alongside investments in AAA-rated debt securities. Conversely, Series 3 and 4 are classified as unsecured.
Why this matters
For shareholders, this transaction signals a major shift in the capital structure. While the influx of Rs 7,000 crore provides liquidity, it introduces fixed interest costs. Investors should monitor future earnings calls to see how management balances this debt load against the company’s growth trajectory and operating margins.
What to track next
Investors should keep an eye on upcoming quarterly filings to track the impact of the 8.95% coupon rate on the company’s interest coverage ratio. Continued monitoring of the debt-to-equity ratio will be essential to ensure that the leverage remains within comfortable limits for the IT sector.