IIFL Finance Limited , a prominent player in the Indian financial services sector, has announced a significant move to bolster its capital base. The company's board has given the green light for a ₹300 crore perpetual debt issue through private placement, marking a strategic step in its ongoing efforts to strengthen its financial position.

Key Details of the Debt Issue

The Finance Committee of IIFL Finance's Board of Directors approved the terms and conditions for the issuance of Listed, Unsecured, Non-Convertible Perpetual Debentures. Here are the crucial aspects of this debt issue:

• Issue Size: Up to ₹300.00 crore, with a base issue size of ₹50.00 crore and a green-shoe option to retain oversubscription up to ₹250.00 crore
• Number of Debentures: Up to 300 Non-Convertible Debentures (NCDs)
• Face Value: ₹1.00 crore per NCD
• Listing: To be listed on the National Stock Exchange of India Limited
• Tenure: Perpetual, with no fixed maturity date
• Security: Unsecured

Implications and Strategic Importance

This perpetual debt issue is a significant development for IIFL Finance for several reasons:

1. Capital Strengthening: The ₹300.00 crore raised will provide IIFL Finance with additional tier-1 capital, enhancing its overall capital adequacy.

2. Flexibility: Perpetual debt instruments offer the advantage of no fixed maturity date, providing the company with long-term funding stability.

3. Investor Appeal: Listed NCDs can be attractive to institutional investors looking for steady, long-term income streams.

4. Regulatory Compliance: The issuance is subject to regulatory approvals, including from the Reserve Bank of India (RBI), especially for any potential call option exercise after a minimum of 10 years.

Additional Terms

• Call Option: IIFL Finance retains the right to exercise a call option after a minimum of 10 years from the deemed date of allotment, subject to RBI approval.
• Default Clause: In case of delayed payments, the company will pay an additional interest of 2% p.a. over the coupon rate until the default is rectified.

This strategic move by IIFL Finance demonstrates the company's proactive approach to capital management and its commitment to maintaining a robust financial structure. As the financial services landscape continues to evolve, such initiatives may play a crucial role in positioning IIFL Finance for sustained growth and stability in the competitive market.

IIFL Finance , a leading non-banking financial company (NBFC), reported mixed results for the first quarter, with strong growth in gold loans offsetting challenges in other segments.

Financial Performance

The company reported a profit after tax of Rs 274.00 crores, up 9% quarter-on-quarter but down 19% year-on-year. Pre-provision operating profit increased 28% quarter-on-quarter to Rs 836.00 crores. Consolidated loan Assets Under Management (AUM) grew 21% year-on-year to Rs 83,889.00 crores.

Gold Loan Rebound

IIFL Finance's gold loan business showed a remarkable recovery, surging 85% year-on-year to Rs 27,274.00 crores, surpassing pre-embargo levels. The gold loan portfolio's Loan-to-Value (LTV) ratio stands at 66%, with yields improving to 18.2%.

Asset Quality Concerns

The company faced asset quality challenges, particularly in the MSME and microfinance segments. Gross Non-Performing Assets (NPAs) stood at 2.3%, while net NPAs were at 1.1%. The company has taken steps to address these issues, including discontinuing unsecured MSME and micro-LAP businesses.

Segment-wise Performance

Management Commentary

Nirmal Jain, Managing Director of IIFL Finance, stated, "This quarter has been a quarter of revival and reassurance. Our gold loan business has fully bounced back from last year's embargo, reaching an all-time high in AUM. We remain focused on building a high-quality, compliant retail loan franchise."

Future Outlook

IIFL Finance maintains its target of overall AUM growth of around 20% for the full year while aiming for a Return on Assets (ROA) of 3%. The company expects credit costs for the year to be around 3%, higher than the earlier guidance of 2.5%-2.7%.

Governance and Risk Management

IIFL Finance has strengthened its board with the appointment of B.P. Kanungo, former RBI Deputy Governor, as a board member. The company is also focusing on enhancing its risk management practices and technology-led execution.

In conclusion, while IIFL Finance faces challenges in certain segments, the strong performance of its gold loan business and strategic focus on retail lending provide a positive outlook for the company's future growth.