Muthoot Capital Services Limited , a prominent player in the financial services sector, has announced a significant move involving its promoters and a new debenture issuance. The company is set to issue green debt securities worth ₹150 crore, backed by non-disposal undertakings from its key promoters.

Promoter Undertakings

Three promoters of Muthoot Capital Services have created non-disposal undertakings on their shareholdings as part of the debenture issuance process. The details of the undertakings are as follows:

Debenture Issuance Details

The non-disposal undertakings are linked to a debenture trust deed for the issuance of 15,000 non-convertible debentures. Key points of the issuance include:

• Total Value: ₹150 crore
• Classification: Green debt securities
• Face Value: ₹1,00,000 per debenture
• Guarantee: Partially guaranteed by GuarantCo Ltd
• Trustee: Vardhman Trusteeship Private Limited (acting as both debenture trustee and security trustee)

Terms of the Undertaking

Under the agreement, the promoters have committed to maintaining a collective stake of at least 51% in the company. This condition ensures that the promoters cannot dispose of their shareholdings in any manner that would reduce their combined ownership below this threshold.

Purpose of Funds

The funds raised through this debenture issuance are earmarked for on-lending to Muthoot Capital Services' borrowers and clients. Specifically, the company intends to use these funds to finance the purchase of new electric vehicles, aligning with the green classification of the debt securities.

Repayment and Listing

The debentures are set to be repaid on a monthly basis, as outlined in the debenture trust deed. Additionally, the company plans to list these debentures on the National Stock Exchange of India Limited, enhancing their liquidity and tradability.

This strategic move by Muthoot Capital Services not only strengthens its capital base but also demonstrates its commitment to sustainable financing through the issuance of green debt securities. The non-disposal undertakings by the promoters further reinforce investor confidence in the company's stability and long-term prospects.

Muthoot Capital Services Limited (MCSL) has taken a significant step in its financial strategy by approving the issuance of non-convertible debentures (NCDs) worth Rs 25 crore. The decision was made by the company's Debenture Issue and Allotment Committee, marking a move to strengthen its capital base through private placement.

Key Details of the Debenture Issue

The approved debenture issue includes the following key features:

Significance of the Issue

This private placement of NCDs represents a strategic financial move for Muthoot Capital Services Limited. The unsecured nature of the debentures, combined with their subordinated status, suggests that the company is looking to raise tier II capital, which can help in improving its capital adequacy ratio.

The relatively high coupon rate of 10.75% per annum, payable monthly, may attract investors looking for regular income streams. The bullet repayment structure, where the principal is repaid in full at maturity, allows the company to manage its cash flows over the 65-month tenure of the debentures.

Regulatory Compliance

MCSL has ensured compliance with regulatory requirements by disclosing the details of the issue as per the Securities and Exchange Board of India (SEBI) regulations. The company's prompt communication to the stock exchanges demonstrates its commitment to transparency and adherence to listing obligations.

Market Implications

The successful placement of these NCDs could potentially strengthen Muthoot Capital Services' financial position, providing it with additional capital for business operations or expansion plans. Investors and market analysts will likely monitor the subscription levels of this private placement as an indicator of market confidence in MCSL's financial instruments.

As the financial services sector continues to evolve, such capital-raising initiatives by established players like Muthoot Capital Services Limited reflect the ongoing efforts to maintain robust capital structures in a competitive market environment.