Edelweiss to diversify source of borrowings

Edelweiss has said its bid to raise Rs 500 crore through the issue of non-convertible debentures(NCDs) was part of an effort to diversify the source of borrowings in addition to meet the funding requirements.

Prior to the NCD route, the group's non-banking finance company (NBFC) ECL Finance Limited was raising the funds only through bank borrowings and private placement. "Obviously, we wanted to diversify the source of borrowings as well," Deepak Mittal, managing director and CEO of Edelweiss Tokio Life said here on Saturday.

The financial firm, which mostly lends against property, said the capital raised through the NCDs would be used for financing activities, including lending and investments among other things.

The loan book of ECL Finance rose to over Rs 4,800 crore by registering a compound annual growth rate (CAGR) of 49 per cent, mostly on the back of significant expansion in the retail loan portfolio last year, according to Anil Kothuri, head of retail finance vertical. ECL Finance would be coming out with many more fund raising events to meet its growing capital requirements, he said.

So far, the average cost of funds for the company stood at a little over 10 per cent and a higher yield of up to 11.85 per cent offered on the fully secured redeemable NCDs would not impact the current net interest margin owing to the loan spread, according to him. The firm aims to raise Rs 250 crore through the issue of NCDs with an option to retain oversubscription another Rs 250 crore.