DHFL NCD issue opens on May 22

DEWAN Housing Finance Corporation Limited (DHFL), one of India’s leading private sector housing finance companies registered with National Housing Bank (NHB), propose to open on May 22, 2018, a public issue of up to 12 crore secured redeemable Non-Convertible Debentures (“NCD”) of face value of Rs 1,000 each, for an amount of Rs 3,000 crore with an option to retain oversubscription of up to Rs. 9,000 crore aggregating up to Rs 12,000 crore.

The Issue is scheduled to close on June 4, 2018 with an option of early closure or extension as decided by the Board of Directors of the Company (Board) or the NCD Public Issue Committee.

Triple AAA Rating

The NCDs proposed to be issued have been rated ‘CARE AAA; Stable’ for an amount up to Rs 15,000 crore, by CARE Ratings Limited (CARE) and ‘BWR AAA’, Outlook: Stable’ for an amount up to Rs 15,000 crore, by Brickwork Ratings India Private Limited (Brickwork). The rating of CARE AAA; Stable by CARE and BWR AAA, Outlook: Stable’ by Brickwork indicate that instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations.

Bharat Pareek, head of treasury, DHFL, said, “Over the last few years, DHFL has been reporting high growth in an increasingly competitive landscape. These are exciting times for DHFL as it strengthens its commitment to actively expand financial inclusion across India and provide greater impetus to the Government’s mission of Housing for All by 2022. The launch of DHFL’s third public issue NCD at this critical phase of growth is set to provide a strong thrust to the company’s growth plans as we progress towards the next phase of high growth. It also allows us to diversify our borrowing portfolio.”

In line with DHFL’s efforts to always bring value-addition to its stakeholders, the company has introduced a floater rate NCD which is benchmarked to Overnight MIBOR. Investors in MIBOR linked NCDs will receive interest based on Overnight MIBOR rate published by FBIL compounded daily and payable annually. We are also offering an attractive interest rate of up to 9.10 per cent pa, one-time additional incentive of up to 1.00 per cent to initial subscribers on maturity and an additional interest of 0.10 per cent p.a for senior citizens. Backed by strong stakeholder trust and our unwavering commitment towards enabling affordable housing dreams, I am confident that DHFL will once again report yet another successful NCD issuance to achieve its ambitious growth plans.”

The minimum application amount is Rs 10,000 collectively across all options on NCDs and in multiples of One NCD after the minimum application. An allotment is on a first-come-first-serve basis (except on the date of oversubscription, if any, when all the investors applying on the said date will get allotment on a proportionate basis). Investors have an option to apply for NCDs in dematerialised as well as in physical form.

Issue Structure:

· In Series I, the tenor is three years and the frequency of coupon payment is annual; the coupon rate for Category I, Category II, Category III and Category IV investors is 8.90 per cent; effective yield for all the categories is 8.90 per cent.

· In Series II, the tenor is 5 years and the frequency of coupon payment is annual; the coupon rate for Category I & Category II investors is 8.90 per cent; the coupon rate for Category III & Category IV investors is 9.00 per cent; effective yield for Category I & Category II investors is 8.90 per cent; effective yield for Category III & Category IV investors is 9.00 per cent.

· In Series III, the tenor is seven years and the frequency of coupon payment is annual; the coupon rate for Category I & Category II investors is 8.90 per cent; the coupon rate for Category III & Category IV investors is 9.00 per cent; effective yield for Category I & Category II investors is 8.90 per cent; effective yield for Category III & Category IV investors is 9.00 per cent.

· In Series IV, the tenor is 10 years and the frequency of coupon payment is annual; the coupon rate for Category I & Category II investors is 8.90 per cent; the coupon rate for Category III is 9.00 per cent & for Category IV investors is 9.10 per cent; effective yield for Category I & Category II investors is 8.90 per cent; effective yield for Category III is 9.00 per cent & Category IV investors is 9.10 per cent.

· In Series V, the tenor is three years and the frequency of coupon payment is monthly; the coupon rate for Category I, Category II Category III and Category IV investors is 8.56 per cent; effective yield for all categories of investors is 8.90 per cent.

· In Series VI, the tenor is five years and the frequency of coupon payment is monthly; the coupon rate for Category I & Category II investors is 8.56 per cent; the coupon rate for Category III & Category IV investors is 8.65 per cent; effective yield for Category I & Category II investors is 8.90 per cent; effective yield for Category III & Category IV investors is 9.00 per cent.

Floating Interest Rate NCD

In Series VII, the tenor is three years and the coupon rate is Benchmark MIBOR plus a spread of 2.16 per cent. Benchmark MIBOR is the Reference Overnight MIBOR published by FBIL computed on an annualised basis and is subject to reset annually based on Overnight MIBOR benchmark rates. Floating Interest rate payable at the end of the 1st year will be Benchmark MIBOR for the relevant Calculation Period plus an applicable fixed spread of 2.16 per cent. As an example, Overnight MIBOR of 6.01 per cent compounded on an annualised basis is 6.19 per cent. This will be computed again for the relevant Calculation Period for 1st, 2nd, and 3rd Interest Payment Dates.

Benefits to senior citizens

Category III and Category IV Investors in the proposed Tranche 1 Issue who are senior citizens on the Deemed Date of Allotment shall be eligible for an additional interest rate of 0.10 per cent pa provided the NCDs issued under the proposed Tranche 1 Issue are continued to be held by such investors under Category III and Category IV on the relevant Record Date applicable for payment of respective coupons. This incentive shall be applicable to an amount not exceeding initial subscription amount.

Additional Incentive

Category III and Category IV Investors in the proposed Tranche 1 Issue, who are initial allottees as on the Deemed Date of Allotment, shall be eligible for a one-time additional incentive of 0.50 per cent, 0.70 per cent, 1.00 per cent and 0.50 per cent for Series II, Series III, Series IV and Series VI respectively, payable along with last interest payment, provided the NCDs under Series II, Series III, Series IV and Series VI, as applicable, are held by such investors under Category III and Category IV on the relevant Record Date, for all interest payments including the last interest payment. This incentive shall be applicable to an amount not exceeding initial subscription amount.

At least 75 per cent of the net proceeds of the Public Issue of NCDs will be used for the purpose of onward lending, financing, and for repayment/ prepayment of interest and principal of existing borrowings of the Company. A maximum of up to 25 per cent will be used for general corporate purposes.

The NCDs offered through this Shelf Prospectus Tranches I Prospectus are proposed to be listed on the National Stock Exchange of India Limited (NSE) and BSE Limited (“BSE”), 

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