SREI Infrastructure Finance has come out with public issue of non-convertible debentures (NCD) offering up to 11.25% interest rate. The issue opens on July 1 and closes on July 20, 2015.
SREI Infra Finance is primarily into financing of infrastructure projects along with advisory.
SREI Infra Finance NCD – Significant Points:
- Offer Period: July 1 – July 20, 2015
- Annual Interest Rates for Retail Investors: 10.25% to 11.25% depending on tenure
- 0.25% additional interest would be payable to Senior Citizens/ employees/ Shareholders/ NCD Holders
- Price of each bond: Rs 1,000
- Minimum Investment: 10 Bonds (Rs 10,000)
- Max Investment Limit for Retail Investor: Rs 10 Lakhs
- Credit Rating: “CARE AA-” by CARE, “BWR AA” (Outlook Stable) by “BRICKWORK”
- Allotment: First Come First Serve
- Listing: Bonds would be listed on BSE only and will entail capital gains tax on exit through secondary market
Also Read – Know NCD – Investment Tips, TDS and Taxation
SREI Infra Finance NCD – Investment Options:
There are 6 options of investment in SREI Infra Finance NCD.
SREI Infra Finance NCD – Who can Apply?
This issue is open to all Indian residents, HUFs and Institutions.
- Category I – Institutional Investors – 15% of the issue is reserved
- Category II – Non-Institutional Investors, Corporates – 15% of the issue is reserved
- Category III – Retail Individual Investors including HUFs – 70% of the issue is reserved
However NRIs cannot apply for this NCD.
Why you should invest?
- The NCD is secured, which means the above debt is backed by assets of the company
- Additional 0.25% coupon rate for certain categories make it attractive for them
- The interest rates are better than your regular FDs
- No TDS if invested in Demat Form
Why you should not invest?
- Infrastructure Financing is risky business as the success depends on timely and successful completion of the project. In India, there are a lot of infrastructure projects struck at various stages for various reasons.
- The NPA is 3.84% which is bad
- The profits of the company declined in last few years
How to Apply?
If you have Demat account apply through that. It’s the easiest way to apply and also avoids a lot of hassle in terms of KYC and paper work
In case you don’t have Demat Account, you can download the application form from company site or Financial Institutions and submit to collection centers.
- My recommendation is to invest some part of your Fixed Income investment in this NCD Issue
- You should always have diversified portfolio be it fixed deposit, NCD or equity investment
- Its good idea to remain invested till maturity because liquidity on exchanges is low and hence you would get lower than market value
If you plan to invest in this issue, do it early as most NCD issues are over-subscribed before the end date.