May 18, 2017 02:47 PM IST

Capital First plans to raise Rs 3,000 - 4000 cr NCDs in FY18

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The Mumbai-based Capital First plans to raise further debt capital of Rs 3000-4000 crore in this fiscal year even as Singapore sovereign wealth fund GIC recently picked up incremental stake in the non-banking finance company.

Capital First saw its five-year long investor private equity firm Warburg Pincus partially exit its investments to reduce its stake to 36 percent from 61 percent, while as a part of the transaction, GIC picked up 8.93 percent additional stake taking its total shareholding in Capital First to 13.91 percent.

Capital First Founder and Executive Chairman V Vaidyanathan, who also holds the third largest stake at 10.5 percent in the firm, said, “The sovereign wealth fund of Singapore is an open-ended fund and they have no exit date and have no specific fund life and it is a good name so it adds a lot of value to us."

“The company now enters the big league and we can always raise more equity or debt for more growth. We have the likes of other investors in the form of Goldman Sachs, HDFC and now IFC which had previously invested USD 55 million, has agreed to invest USD 50 million."

He said the NBFC has no equity capital raising plans but will keep raising debt funds through NCDs (non-convertible debentures).

On Thursday, the NBFC said it approved issue of NCDs of Rs 50 crore plus a green shoe option of Rs 50 crore.

“NCDs are much cheaper than other sources of funds…We plan to raise anywhere between Rs 3,000-4000 crore worth of NCDs this year," Vaidyanathan said, adding that he plans to continue to grow the loan book by 25 percent and higher profitability.

Capital First’s net profit for the March quarter increased by 56 percent to 69 crore and its assets under management grew to Rs 19,824 crore with the share of SME loans at 66 percent and consumer loans at 34 percent.

Demonetisation has helped our loan growth as more money came into the formal channels, Vaidyanathan said.

The gross NPAs (non-performing assets) have come down to 0.95 percent as of March 31, 2017 as compared to 1.08 percent as of March 31, 2016.

With the new 90-day cycle of recognizing NPAs from the current 120 days, Vaidyanathan expects to see a marginal impact on NPAs to increase to about 1.5 percent.

"But it will not impact profitability as we take provisions for 90 days even at present," he added.
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