Regency Fincorp has announced a private placement of secured, rated, listed Non-Convertible Debentures (NCDs) worth Rs 65 crore. The 18-month instrument carries an annual coupon rate of 12%, payable monthly. The issuance, backed by a 1.25x security cover comprising MSME and digital loan receivables, will be executed via the Electronic Book Provider platform.
Regency Fincorp Approves Rs 65 Crore NCD Issuance
Issue Size: Rs 65 crore (Rs 25 crore base + Rs 40 crore green shoe).
Coupon Rate: 12% per annum, payable monthly.
Reader Takeaway: The 12% coupon offers regular income, while the 1.25x security cover provides asset-backed protection for debenture holders.
What just happened
Regency Fincorp Limited has received board approval to raise Rs 65 crore through the private placement of secured, rated, listed Non-Convertible Debentures (NCDs). The issuance consists of a base of Rs 25 crore and a green shoe option of Rs 40 crore, with each debenture having a face value of Rs 10,000. The company will utilize the Electronic Book Provider (EBP) mechanism to facilitate this fundraising.
Why this matters
This debt issuance highlights the company's ongoing strategy to strengthen its balance sheet for lending activities. With an interest rate of 12% paid on a monthly basis, the instrument is designed to provide steady cash flows to investors. The commitment to a 1.25x security cover ensures that the debt remains collateralized by a mix of MSME secured loan receivables and CashMySalary digital receivables.
Terms and Security
The NCDs carry an 18-month tenure from the date of allotment. A significant clause included in the filing is the penalty for default: if interest or principal payments are delayed by more than three months, a penal interest of 5% per month will be charged over the base coupon rate.
Governance
The company has appointed Catalyst Trusteeship Limited to act as the trustee for this issuance, while Credora Partners Private Limited has been appointed as the merchant banker to oversee the process.
Risks to watch
Investors should closely track the asset quality of the underlying loan portfolio. As the security cover is linked to MSME and digital receivables, any degradation in the performance of these loan books could impact the 1.25x security threshold. Additionally, the company's ability to meet monthly interest obligations will be tested throughout the 18-month tenure.