ARKA FINCAP LIMITED NCD IPO – December 2023

In the dynamic world of finance, opportunities arise for investors seeking stable returns and secure investments. Arka Fincap Limited, a non-deposit-taking, non-banking financial company headquartered in Mumbai, is set to open its doors to investors through its Secured Redeemable Non-Convertible Debentures (NCD) Initial Public Offering (IPO). This article delves into the key details, credit ratings, associated risks, investor eligibility, and the unique connection between BondsIndia and this IPO.

Key Details of the ARKA Fincap Limited NCD IPO 2023

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Arka Fincap Limited is launching a Base Issue of Rs.150 Crores with an option to retain an oversubscription of Rs.150 Crores, aggregating up to Rs.300 Crores. The issue opens on December 7, 2023, and closes on December 20, 2023. The face value of the NCD is Rs.1,000 per NCD, and the minimum application is set at Rs.10,000. The yield goes up to an attractive 9.99%, making it an enticing proposition for investors.

Credit Rating:

Crisil has assigned a credit rating of AA-/Positive to Arka Fincap Limited, indicating a high degree of safety regarding the timely servicing of financial obligations. This positive rating reflects the company’s financial strength and stability, making it a compelling option for risk-conscious investors.

Risks Involved:

While the prospect of high returns is alluring, investors must be aware of potential risks associated with Arka Fincap Limited. The company operates in a nascent stage, having commenced operations in April 2019. The total loan book, as of December 31, 2022, stands at Rs.3,390 Crores, with exposures to corporate (45%), real estate (32%), and SME/micro-SME segments (23%). The ability to scale up operations while maintaining asset quality is a key monitorable.

Investor Eligibility:

The NCD IPO caters to a diverse set of investors, including Institutional Investors, Retail Individual Investors, Non-Institutional Investors, and High Net Worth Individuals. The issue break-up allocates 25% each to these categories, allowing a broad spectrum of investors to participate.

Credit Strengths and Weaknesses:

Credit Strengths:

Strategic Importance and Support from KOEL: Arka Fincap derives strong support from its ultimate parent, KOEL, a step-down subsidiary. KOEL has infused around ₹1,000 Crores to date, reflecting robust financial backing and strategic importance.

Adequate Capitalization: With a net worth of ₹1,131 Crores and a Capital Adequacy Ratio of 25.5% as of March 2023, Arka benefits from sufficient capitalization. Low gearing, at 3x as of March 2023, further strengthens its financial position.

Customer-Centric Business Model: Arka’s focus on customers as significant stakeholders has resulted in a high customer retention rate. Serving approximately 30,000 active customers as of September 2023, the customer-centric approach contributes to the company’s success.

Credit Weaknesses:

Nascent Stage of Operations: Being in the nascent stage, Arka Fincap faces the challenge of building a loan book with a healthy mix of corporate, real estate, and MSME segments.

Connecting BondsIndia with the Arka Fincap Limited IPO

Investors looking to participate in the Arka Fincap NCD IPO can leverage the platform provided by BondsIndia. BondsIndia facilitates a seamless application process, allowing investors to apply for the NCDs conveniently. This connection streamlines the application procedure, making it user-friendly for both seasoned and novice investors.

In conclusion, Arka Fincap Limited’s NCD IPO offers a promising investment opportunity with its attractive yield, solid credit rating, and strategic support from KOEL. However, investors should carefully weigh the associated risks, considering the company’s nascent stage of operations. With BondsIndia as a bridge, investors can effortlessly engage with this opportunity, aligning with their financial goals and risk appetite. As the IPO opens on December 7, 2023, it beckons investors to explore the potential for stable returns in the ever-evolving landscape of financial opportunities.