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Realty cos are back with attractive NCDs to lure HNIs


MUMBAI: After a six-month lull, real estate companies are back in the money market to raise working capital funds by issuing non-convertible debentures (NCDs) to rich investors. Thick collateral cover and a promise to pay annualised returns of 16%-18% are making the issuances popular among savvy investors.

Wealth managers and non-banking finance companies such as India InfolineBSE 2.70 %, Edelweiss, Kotak,JM FinancialBSE 0.58 % and Reliance PMS, among others, are arranging funds for realtors by distributing 'collateralised' NCDs to high net worth investors (HNIs).

Each offering has a size of 200-300 crore. In most cases, the threshold limit for investors starts at 10 lakh, and goes up to 1 crore. Ackruti Developers, Sheth Developers, Kumar Housing, Wadhwan Group, andLodha Developers are among realtors raising money through this route. 

"This is a viable route for developers to raise money. Investors, too, get a good fixed income product with high coupon rates," said Anshu Kapoor, head - global wealth management, Edelweiss Financial ServicesBSE -0.85 %. "The collateral kept to safeguard investors could be as high as 2-2.5 times the money invested," he said. 

NCDs are similar to bank fixed deposits in many ways. These securities are issued by companies for varying periods, often one to three years, and are listed on stock exchanges. However, most real-estate NCDs are not listed.