360 ONE WAM subsidiary to raise Rs 1,000 crore through NCDs

360 ONE Prime is looking to raise up to Rs 1,000 crore through its maiden public issue of secured, rated and redeemable non-convertible debentures (NCDs), the wholly-owned subsidiary of 360 ONE WAM said on January 8. The base issue is of Rs 200 crore, with a greenshoe option of Rs 800 crore.

The NCDs would be issued at face value of Rs 1,000 each, with a coupon rate of 9.66 percent. The public issue opens on January 11 and closes on January 24, with an option of early closure or extension.

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360 ONE Prime is the lending vehicle of the 360 ONE group. “We are raising funds for onward lending, debt servicing and/or repayment of interest and principal of existing borrowings,” the company said at a press conference.

Ten percent of the issue has been reserved for institutional investors, 20 percent for non-institutional investors, 30 percent for high networth individuals and 30 percent for retail. The NCDs have been rated CRISIL AA/Stable and [ICRA]AA (Stable).

Diversifying borrowing mix

Karan Bhagat, founder, managing director and chief executive officer, 360 ONE, said they were looking to diversify their liability mix. Currently, the company borrows from about four-five banks, commercial papers and market-linked debentures.

“Ever since we got the NBFC license back in 2015, we haven’t raised funds via public issue of NCDs. This is the first time we see a need for diversification,” said Bhagat. The issue comes at a time when the Reserve Bank of India has cautioned about banks’ growing exposure to NBFCs.

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360 ONE Prime has a secured book of 88 percent, primarily engaged in loans against securities and loan against property. Unsecured is 12 percent of the book, he added.

“We are prudent with risk management. In loan against securities, the loan-to-value is constantly monitored and re-adjusted,” Himanshu Jain, CEO and Whole-time Director, 360 ONE Prime, said.

The company’s assets under management grew to Rs 4,926 crore on March 31, 2023 from Rs 3,703 crore on March 31, 2021. It has no gross non-performing assets and net non-performing assets till date .

Also Read: RBI changes norms on redemption funds, buyback of CPs

What should retail investors do?

The coupon rate is attractive compared to the fixed deposit rates offered by some private banks. Ajay Manglunia of JM Financial, among the lead managers to the issue, said that retail investors are getting exposure to a “good book with nil asset quality problems”.

However, some small finance banks are offering similar rate of interest on certain fixed deposits. “That also has deposit insurance up to Rs 5 lakh per account, per account holder by DICGC,” Anshul Gupta, co-founder and Chief Investment Officer, Wint Wealth, said.

“It has a very concentrated product portfolio and books on a standalone basis. Moreover, the top 20 customer exposures form 48 percent of the total loans as per ICRA’s rating report,” Gupta said.