Paisalo Digital Ramps Up Growth with Secured NCD Issuance

Paisalo Digital Limited, a prominent player in India’s non-banking financial services (NBFC) sector, announced a strategic move to bolster its financial resources. On April 12, 2024, the company revealed plans to raise funds through the issuance of Secured Rated Listed Redeemable Non-Convertible Debentures (NCDs). This approach indicates Paisalo Digital’s commitment to sustainable growth and its focus on expanding its lending capabilities.

Understanding NCDs

NCDs are essentially debt instruments issued by companies to raise capital. They are “secured,” meaning they are backed by specific company assets in case of default. Being “rated” indicates that credit rating agencies have assessed the creditworthiness of the NCDs, offering a level of assurance to potential investors. “Listed” signifies that the NCDs will be traded on a stock exchange, providing investors with an exit option. Finally, “non-convertible” implies that the NCDs cannot be converted into equity shares of the company.

NCD Issue Details

The company will issue 1,800 secured rated listed redeemable non-convertible debentures (NCDs) with a face value of 1,00,000 through a private placement. The tenure of the instrument will be 15 to 18 months from the date of allotment, i.e., April 12, 2024. The company will pay an annual interest of 9.95%, which will be paid quarterly.

The NCDs will be secured by a first-ranking Pari-passu charge on loan receivables to maintain the security’s value at all times equal to 1.10x the aggregate amount of principal outstanding of the NCDs. The NCDs will be redeemed at par on the maturity dates, i.e., July 12, 2025, for 1200 NCDs and October 10, 2025, for 600 NCDs.

Benefits for Investors

Investors considering participation in Paisalo Digital’s NCD offering can potentially benefit from attractive interest rates, typically higher than traditional fixed deposits. Furthermore, the secured nature of these NCDs offers a degree of protection for the invested capital. Additionally, the listing on a stock exchange provides investors with liquidity options.

About Paisalo Digital Ltd

Incorporated in 1992, Paisalo Digital Ltd is a Non-Deposit Taking Non-Banking Financial Company (NBFC), which provides a number of financial products like Business Loans, SME & MSME Loans, and Income Generation Loans.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.