Shriram City to raise Rs 750 cr via bonds

Non-banking finance company Shriram City Union Finance (SCUF) today said it will raise up to Rs 750 crore through a non convertible debenture (NCD) issue this month.

The issue, which would be open between August 11 and 27, will let investors choose between the three years and five years tenor options and will carry a coupon rate of up to 12.10% per annum.

The basic objective of the issue is to raise Rs 375 crore, while the company has a green-shoe option to retain oversubscriptions of an equal amount.

The South-based company plans to use the proceeds of the issue in regular financing business and repaying debt.

Incorporated in 1986, SCUF is the country's biggest lender to small enterprises requiring loans of up to Rs 10 lakh and is also present in other segments like two-wheeler finance, loans against gold and existing two-wheelers, and financing white goods.

It plans to enter the home finance segment soon through a dedicated wholly owned subsidiary, its Executive Director Subhasri Sriram told reporters here.

The company plans to list the NCDs on both the Bombay Stock Exchange and National Stock Exchange from the beginning itself so that investors get the liquidity.

SCUF is a part of the Shriram Group that grew out of a chit fund business and Sriram said its database of over seven million customers is very important in SCUF's growth trajectory.

SCUF had clocked a 47% growth in net profit in FY11 at Rs 241 crore.