Sachin Bansal’s Navi announces Rs 600 Cr increase in MNT
Navi Technologies led by Sachin Bansal (Navi) Wednesday announced that it would raise up to Rs 600 crore through the issuance of secured and redeemable non-convertible debentures (NCDs).
The show opens on Monday, May 23, 2022 and is scheduled to close on Friday, June 10, 2022, with an option to close early or extend.
The company said the NCDs will have a face value of Rs 1,000 each for an amount aggregating up to Rs 300 crore, with a green shoe option to retain an oversubscription of up to Rs 300 crore. Navi Finserv Limited (NFS) is a wholly owned subsidiary of Navi Technologies.
Investors will have the option to participate in secured NCDs under various series for duration of 18 months and 27 months with an effective yield of up to 9.80% and a minimum demand size of Rs 10,000, the statement added.
“We have worked hard in silence over the past few years and built our business. This question will take us to the next level of growth. We are a growing company and will therefore be raising both debt and equity,” said Sachin Bansal, President of Navi Technologies during the announcement.
IPO-linked financial services firm NFS is the first fintech to announce an MNT issue.
Speaking of the issue of NCDs, Ankit Agarwal, Managing Director of NFS, said: “NCD’s upcoming issuance aims to raise funds for lending and funding purposes. This will further diversify our borrowing profile and add more retail investors to our portfolio to complement our large base of institutional partners. It is is a secure instrument with A (stable) rating, low application size and effective yield of up to 9.8%.”
Universal banking license rejected
The company faced a slight setback when the Reserve Bank of India (RBI) refused the banking license of Chaitanya India Fin Credit Private Limited, a microfinance entity of Navi, as it was not deemed suitable under Universal’s “on-demand” licensing guidelines. Banks”.
“We will assess RBI’s written response and map out our next course of action. Many options are available to us and there are many things to explore as a new request. We will consider whether we want to appeal and weigh our options,” Sachin said. The RBI announcement came as Bansal was addressing the press conference to announce the company’s first issue on NTMs.
Chaitanya India Fin Credit Private Limited was among the six applicants deemed unsuitable for obtaining a banking license.
“It’s not the end of the road,” Sachin added.
In June 2021, Bansal was issued an opinion speak Directorate of Enforcement (DE) for alleged violations of regulations under the Foreign Exchange Management Act (FEMA). Ongoing litigation could be one of the possible reasons for rejection. A report by Reuters news agency last year said the ED had demanded an explanation as to why the company and its founders should not be fined more than Rs 10,000 crore. for alleged FEMA violations. Bansal then petitioned the Madras High Court to challenge and seek the quashing of the opinion and the lawsuit filed by the ED.
His request is currently pending before the HC and no action has been taken by the ED following the opinion.
IPO plans on track
Navi filed his draft red herring flyer (HDRD) in March 2022, to raise Rs 3,350 crore through an IPO. The whole fundraising will be a new issue, which means that Bansal, which has already invested around Rs 4,000 crore in Navi to date, will not dilute its stake in the IPO. He holds a 97.77% stake.
It has appointed ICICI Securities, BofA Securities and Axis Capital to manage its public offering and plans to use the funds for its two subsidiaries, Navi Finserv Pvt. Ltd (Rs 2,370 crore) and Navi General Insurance (Rs 150 crore).
“We are a very young company with big ambitions. It’s almost like a record being created where a company in our time is able to create a public debt issuance of this size, which is usually associated with large organizations,” Sachin said.
Navi is a digital lending app that provides loans including personal and home loans of up to Rs 20 lakh instantly through a completely paperless process, in addition to other financial services and products such as retail health insurance and mutual funds. Its disbursement is based on its own dematerialized credit subscription mechanism.
Bengaluru-based Navi, which was established in 2018 and became profitable in 2020-21, recorded a consolidated profit of Rs 71 crore with total revenue of Rs 780 crore and expenses of Rs 673 crore.