In a bid to repay its existing loans and to step up the financing activities of the company, Tata Capital has made a public offering of five-year non-convertible debentures at 12 per cent, to raise Rs 500 crore (option to retain additional Rs 1,000 crore as over subscription) that closes for subscription on February 24.
If the company raises Rs 1,000 crore by over subscription of the issue, it will utilise the fund for retail financing and corporate finance.
While interest rates are softening the company is offering an interest rate of 12 per cent that may raise its cost of funding. “Rs 1,500 crore will form only 16 per cent of our total portfolio and fund raised from banks and mutual funds reduces the weighted average cost,” said, Praveen P Kadle, MD & CEO, Tata Capital.
While the ECB route is also available to raise funds, the company does not see a lot of opportunity there. “As and when the flow through ECB route increases, we may raise funds through that route,” said J Niranjan, head, investment banking, Tata Capital. The company also plans to launch its first private equity fund with an initial amount of close to $ 500 million (approx. Rs 2,500 crore) in the first quarter of the financial year 2009-10.